Programming Strategies of U.S.-Originated Cable Networks in Asian Markets: Descriptive Study Based on the Product Standardization/Adaptation Theory

Home , Cartoon Network Studios, Discovery Channel Europe, Famous Players, MTV Japan, MTV Mandarin, MTV Shows

PROGRAMMING STRATEGIES OF U.S.-ORIGINATED CABLE NETWORKS IN ASIAN MARKETS: DESCRIPTIVE STUDY BASED ON THE PRODUCT STANDARDIZATION/ADAPTATION THEORY

GORO OBA

A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY

UNIVERSITY OF FLORIDA

2007

To Mitsuko Oba and Marin Oba.

3 ACKNOWLEDGMENTS

Whenever I am almost daunted by some difficulties, I always bring to mind my

favorite words once spoken by Robert Kennedy: “Only those who dare to fail greatly can

ever achieve greatly.” I am still unsure if I have achieved something greatly, as I have just

completed a dissertation and my doctoral degree. However, I am sure that I would never

have been one step closer to my dream if I had feared failure. It was actually a decision involving many risks for me to study in the United States, but I have embarked on an academic journey for intellectual fulfillment.

This dissertation is the culmination of my study from 2001 to the present. I could not

have survived the years without the encouragement from the following people who helped

me to pursue academic challenges. First of all, I would like to give my sincerest gratitude

and appreciation to my supervising committee members at University of Florida. I wish to

thank Dr. Sylvia Chan-Olmsted, the chair of the committee and my academic advisor and

mentor, for her wisdom, honesty, encouragement, and guidance I always hold valuable. I

feel truly blessed to work as an assistant of her and indebt to her in my life. When I give a

lecture to my students or conduct research, I often ponder what she is likely to do if she

were in my position. I enjoyed talking with Dr. Marilyn Roberts because of her witty

remarks and jokes. It should be noted that the original idea of this dissertation initially arose

during I took the International Advertising course offered by her. I also appreciate Dr.

Juan-Carlos Molleda’s advices, which are based on his rich knowledge of the international

public relation arena. I am grateful to Dr. Jinhong Xie for comments and suggestions. Her

wealth of knowledge regarding international marketing study was invaluable at all phases of

this project. I like the committee very much because it is really an “international” team. I

would also like to thank some faculty members at Michigan State University. Dr. Steve

Wildman, Dr. Johannes Bauer, Dr. Barry Litman, and Dr. Thomas Baldwin taught me how

exciting to research media economics and industries.

4 I also owe a special debt of gratitude to many friends and organizations for their

continued support and encouragement. I appreciate my old friends Hiromichi Sakai and

Leon Liu, who have extensive business networks, for their support to set up interviews. I

would like to thank executives and managers of MTV, Cartoon Network, ESPN, and

Discovery Channel, who participated in interviews, for their precious time, data, and

comments. My officemates at University of Florida, in particular Changhyun Jin, Al Tritico,

and Roxanne Watson, shared with me ideas, information, and laughter. Daphne Landers and

Byenghee Chang, advisees of Dr. Chan-Olmsted as well as myself, helped me when I was in

trouble with research. I also thank the Japanese Society of Gainesville for regularly having

parties to relax. My ten years of experience in Nippon Television Network became the

cornerstone for my academic career, and colleagues at the network still give me a boost.

The dissertation research was supported by the grant from Hoso Bunka Foundation

established by NHK and the research fund of Kyoto Gakuen University.

Last but not least, I wish to thank my parents for realizing and understanding the

importance of study to me since I was a kid and for being brave enough to set me free to

pursue my dreams. I adore the Suzukis, the Shimokawas, and the Hirabayashis for being

patient with me and seeing me through tough times. My grandmothers passed away in the

year I returned to Japan and the following year. They were obviously sad events, but I was

fortune to be able to say last goodbyes to them who always looked forward seeing my

growth. Finally, my deepest appreciation goes to my wife Mitsuko for her love and patience.

I would never forget that she accepted my dream with an open mind and compassionate heart when I left a television network. Neither my study in the United States nor this dissertation could have been completed without her continuing support and encouragement.

One of our best experiences in the United States was the birth of our daughter Marin, who

provided a joyful dimension to our lives. Mitsuko and Marin are always a positive

motivating force within my life. I have the best family in the world.

5 TABLE OF CONTENTS

ACKNOWLEDGMENTS ...... 4

LIST OF TABLES ...... 12

LIST OF FIGURES ...... 13

LIST OF ABBREVIATIONS ...... 14

ABSTRACT...... 15

CHAPTER

1 INTRODUCTION...... 17

Media Globalization and Global Television Networks...... 17 Gaps in Current Literature...... 23 Purpose of the Study...... 27

2 LITERATURE REVIEW...... 35

Theoretical Backgrounds for Product Standardization/Adaptation...... 35 Determinants of the Degree of Product Standardization/Adaptation ...... 41 Product Characteristics...... 43 Target Market Segment ...... 44 Country’s Cultural Characteristics ...... 47 Country’s Environmental Characteristics...... 50 Economic condition...... 50 Physical/geographic condition ...... 51 Legal environment...... 52 Infrastructure/supporting sector ...... 53 Industry Competition...... 54 Brand and Country of Origin...... 55 Firm Characteristics...... 59 Philosophy/orientation ...... 59 Resource...... 62 Degree of centralization/decentralization...... 64 Market entry mode ...... 65

3 APPLICATION OF INTERNATIONAL MARKETING THEORIES ...... 74

Standardization/Adaptation of Television Programming...... 74 Determinants of the Degree of Programming Standardization/Adaptation...... 75 Product Characteristics...... 75 Target Market Segment ...... 79 Country’s Cultural Characteristics ...... 81 Country’s Environmental Characteristics...... 84 Economic condition...... 84 Physical/geographic condition ...... 86

6 Legal environment...... 87 Infrastructure/supporting sector ...... 89 Industry Competition...... 93 Brand and Country of Origin...... 95 Firm Characteristics...... 98 Philosophy/orientation ...... 98 Resource...... 99 Degree of centralization/decentralization...... 101 Market entry mode ...... 102 Research Questions...... 103

4 METHODOLOGY...... 106

Qualitative Research...... 106 Case Study ...... 108 Selection and Number of Cases...... 110 Sample Networks...... 111 Sample Markets...... 113 Selection...... 113 Characteristics ...... 116 Data Sources and Collection...... 117 Personal Interview...... 117 Interview Design ...... 118 Interview Instruments...... 119 Interview Procedures...... 120 Existing Documents...... 121 Analytical Method ...... 123

5 RESULTS ...... 126

General Overview...... 126 MTV...... 126 Cartoon Network...... 127 ESPN ...... 128 Discovery Channel ...... 129 Programming Products ...... 130 MTV...... 131 Cartoon Network...... 131 ESPN ...... 132 Discovery Channel ...... 133 Cross case analysis...... 134 Localization ...... 134 MTV...... 135 Cartoon Network...... 137 ESPN ...... 139 Discovery Channel ...... 141 Cross case analysis...... 142 Product Characteristics ...... 144 Cultural Sensitivity/Universal Appeal...... 144 MTV...... 144

7 Cartoon Network...... 145 ESPN ...... 147 Discovery Channel ...... 148 Cross case analysis...... 149 Production Cost and Format...... 150 Target Market Segment...... 152 MTV...... 152 Cartoon Network...... 153 ESPN ...... 153 Discovery Channel ...... 154 Cross case analysis...... 154 Country’s Cultural Characteristics...... 155 MTV...... 155 Cartoon Network...... 157 ESPN ...... 159 Discovery Channel ...... 161 Cross case analysis...... 162 Country’s Environmental Characteristics...... 164 Economic Condition...... 164 MTV...... 165 Cartoon Network...... 165 Discovery Channel ...... 165 Cross case analysis...... 165 Physical/Geographic Condition...... 166 MTV...... 167 Cartoon Network...... 167 ESPN ...... 167 Discovery Channel ...... 168 Cross case analysis...... 168 Legal Environment ...... 169 MTV...... 169 Cartoon Network...... 169 ESPN ...... 170 Discovery Channel ...... 170 Cross case analysis...... 170 Infrastructure/Supporting Sector ...... 171 MTV...... 171 Cartoon Network...... 172 ESPN ...... 172 Discovery Channel ...... 173 Cross case analysis...... 173 Industry Competition...... 175 MTV...... 176 Cartoon Network...... 176 ESPN ...... 177 Discovery Channel ...... 178 Cross case analysis...... 178 Brand and Country of Origin...... 179 Brand ...... 179

8 MTV...... 179 Cartoon Network...... 181 ESPN ...... 181 Discovery Channel ...... 182 Cross case analysis...... 182 Country of Origin ...... 183 MTV...... 184 Cartoon Network...... 184 ESPN ...... 185 Discovery Channel ...... 185 Cross case analysis...... 185 Firm Characteristics...... 186 Philosophy/Orientation...... 186 MTV...... 186 Cartoon Network...... 187 ESPN ...... 188 Discovery Channel ...... 189 Cross case analysis...... 189 Cost-Benefit Consideration ...... 190 MTV...... 191 Cartoon Network...... 192 ESPN ...... 193 Discovery Channel ...... 195 Cross case analysis...... 196 Property-Based Resource ...... 197 MTV...... 198 Cartoon Network...... 198 ESPN ...... 199 Discovery Channel ...... 199 Cross case analysis...... 199 Knowledge-Based Resource...... 200 MTV...... 201 Cartoon Network...... 202 ESPN ...... 202 Discovery Channel ...... 202 Cross case analysis...... 203 Degree of Centralization/Decentralization...... 203 MTV...... 204 Cartoon Network...... 205 ESPN ...... 206 Discovery Channel ...... 207 Cross case analysis...... 208 Market Entry Mode ...... 210 MTV...... 210 Cartoon Network...... 210 ESPN ...... 211 Discovery Channel ...... 211 Cross case analysis...... 211 Overall Results...... 213

9 MTV...... 213 Cartoon Network...... 214 ESPN ...... 215 Discovery Channel ...... 216

6 CONCLUSIONS AND DISCUSSION...... 222

Findings ...... 222 Product Characteristics...... 223 Target Market Segment ...... 224 Country’s Cultural Characteristics ...... 225 Country’s Environmental Characteristics...... 226 Industry Competition...... 226 Brand and Country of Origin...... 227 Firm Characteristics...... 228 Final Thoughts...... 229 Managerial Implications ...... 231 Contributions of the Present Study ...... 235 Limitations and Future Research Directions ...... 236

APPENDIX

A LIST OF INTERVIEWEES...... 242

B SUBJECT RECRUITMENT...... 243

C INTERVIEW QUESTIONNAIRE...... 245

D COPY OF INFORMED CONSENT SHEET...... 246

E INTERVIEW WITH MTV JAPAN-1...... 247

F INTERVIEW WITH MTV JAPAN-2...... 252

G INTERVIEW WITH MTV TAIWAN...... 257

H INTERVIEW WITH MTV ASIA...... 267

I INTERVIEW WITH CARTOON NETWORK JAPAN ...... 283

J INTERVIEW WITH CARTOON NETWORK TAIWAN...... 290

K INTERVIEW WITH CARTOON NETWORK ASIA/PACIFIC...... 301

L INTERVIEW WITH SPORTS-I ESPN...... 312

N INTERVIEW WITH ESPN TAIWAN...... 320

O INTERVIEW WITH ESPN ASIA ...... 330

P INTERVIEW WITH DISCOVERY CHANNEL JAPAN...... 340

10 Q INTERVIEW WITH DISCOVERY CHANNEL ASIA...... 353

LIST OF REFERENCES...... 363

BIOGRAPHICAL SKETCH ...... 389

11 LIST OF TABLES

Table Page

1-1 Shares of revenues by countries/regions in the top three TNMCs...... 33

1-2 Global reach by U.S.-originated cable networks...... 33

1-3 MTV’s country/region-specific channels and ownership patterns...... 34

2-1 Determinants of the degree of product standardization/adaptation...... 67

4-1 Sample matrix based on two dimensions...... 124

4-2 Sample networks’ offices in Asia...... 124

4-3 Characteristics of sample markets ...... 125

5-1 Ratio of network programming on each local channel’s schedule...... 217

5-2 Direction of networks’ programming product by determinants...... 217

12 LIST OF FIGURES

Figure Page

2-1 Direction of product standardization/adaptation and determinants...... 72

5-1 Continuum of television programming localization...... 219

5-2 Ownership structure of MTV...... 219

5-3 Ownership structure of Cartoon Network...... 220

5-4 Ownership structure of ESPN...... 220

5-5 Ownership structure of Discovery Channel...... 221

6-1 Framework determining networks’ programming standardization...... 241

13 LIST OF ABBREVIATIONS

CEO chief executive officer

CNNI Cable News Network International

CNO Cartoon Network original

ESPN Entertainment and Sports Programming Network

MGM Metro-Goldwyn-Mayer Inc.

MLB Major League Baseball

MTV Music Television

MVPD multichannel video programming distribution

NBA National Basketball Association

NFL National Football League

RBV resource-based view

RQ research question

TNMC transnational media corporation

UEFA Union of European Football Associations

VMA Video Music Awards

14 Abstract of Dissertation presented to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy

PROGRAMMING STRATEGIES OF U.S.-ORIGINATED CABLE NETWORKS IN ASIAN MARKETS: DESCRIPTIVE STUDY BASED ON THE PRODUCT STANDARDIZATION/ADAPTATION THEORY

Goro Oba

August 2007

Chair: Sylvia M. Chan-Olmsted Major: Mass Communication Transnational media corporations dominate cable television network ownership in

the United States and have aggressively established many foreign subsidiaries and affiliates

for their cable networks, expanding their worldwide audiences. This multiple-case study

explored television programming products of U.S.-originated cable networks, namely, MTV,

Cartoon Network, ESPN, and Discovery Channel, in Asian markets and what factors are

perceived as determinants of programming decisions by the networks. On the basis of

theoretical foundations concerning product standardization/adaptation in international marketing research, the present study was intended to provide a framework for understanding how various external as well as intra-firm factors could affect the programming product offerings of global television networks. Primary data for analysis were gathered through personal interviews with executive and managers of the aforementioned networks in such Asian markets as Japan, Taiwan, and Singapore.

In light of actual programming product offerings, each of U.S.-originated cable

networks employed unique programming strategy in Asian markets. While some networks

attempted to distribute the same programming on a global scale, others encouraged local

teams to develop more localized programming. The possibility for each programming

strategy is contingent on various factors. Given the fact that viewers generally prefer

15 products more relevant to them, the significance of programming products adapted to individual local markets was emphasized by networks. Yet, the degree to which local viewers prefer locally adapted programming to standardized programming seemed dependent on the national cultural characteristic. Meanwhile, programming products tended to be distributed on a global basis, if they were perceived to have universal appeal, and networks pursued the economies of scale and scope and cost savings. It was also believed that by offering the same programming product worldwide, networks could maintain and reinforce their global brands. Ultimately, characteristics inside the network, such as orientations and philosophies with respect to international operations, resources possessed by them, and the centralization or decentralization of authority, affected the direction of their programming strategies.

16 CHAPTER 1 INTRODUCTION Media Globalization and Global Television Networks

International business related to television programming has undergone a radical

transformation since the late 1980s, mainly as a result of the privatization of media firms

and the deregulation of industries, which once were under strong state-controls in many

countries, and the development of new video distribution technologies, which multiplied the

number of channels to be filled. In the long-standing business of international trade,

individual television programs have been sold basically either on a per-series basis (e.g., a

drama series) or as a single product (e.g., a documentary program) by broadcasters,

producers, or intermediary agents in a country to their trading partners in overseas markets.

As far back as the 1950s, motion picture companies in the United States envisaged the

overseas syndication of television programs produced in their own studios (Renaud &

Litman, 1985). Since then, vendors have exported television programs while committing a

relatively small amount of investment in human and financial resources. As this traditional,

stand-alone trade pattern for television programming remains unchanged, another pattern

relevant to “media globalization,” which necessitates more elaborate strategic decisions by

media firms, has come to the forefront in international television business. Instead of

obtaining syndication revenue by using programming stockpile, media firms have

developed their own television networks around the world.

Although the term “globalization” has been discussed everywhere often as a

buzzword, it is generally defined as the process in which firms link and coordinate their activities on a worldwide basis, integrating technology, labor, and financial and capital resources based on interdependence among countries (Hitt, Ireland, & Hoskisson, 2003).

Globalization has also been central to discourse in the media industry. In particular, media globalization has been driven by the worldwide expansion of activities by large media firms, which are often referred to as “transnational media corporations (TNMCs)” (Gershon, 1997;

17 Hollifield, 2001) or “global media conglomerates” (Chan-Olmsted, 2006). Media firms are

economic institutions engaged in the production and distribution of media products targeted

toward consumers (Albarran & Chan-Olmsted, 1998). TNMCs, which are regarded as the

most powerful economic forces within global media activities (Gershon, 1993), have a

diverse range of operations and media sectors in multiple countries of the world, striving to

use the corporative strategy of diversification to achieve the advantageous economies of

scale and scope.

Among others, the United States is by far the home country to most TNMCs. As

shown in Table 1-1, the three TNMCs originated and still based in the United States with

the largest activities worldwide (Time Warner, Disney, and Viacom) have increasingly relied

on the markets outside the United States for a substantial portion of their revenues. It is anticipated that the significance of non-U.S. markets would further increase as the key to future growth because of saturating demand for many media products in the United States, which has traditionally been the world’s most important market for many TNMCs in terms of revenues (Chan-Olmsted & Albarran, 1998; Croteau & Hoynes, 2001). If U.S. media firms can no longer rely on the domestic market for growth, it makes sense that they would eagerly seek higher out-of-home revenues. In addition, due to the possibility of economic decline in a particular foreign market, coupled with the uncertainty pertaining to consumers’ acceptance of media products, TNMCs may diversify overseas operations, hoping that loss in the market could be offset by virtue of profit in some other markets, i.e., cross-subsidization across markets. Given these drivers for global expansion, TNMCs would attempt to enter overseas media markets via the most profitable means whenever feasible.

In order to establish far-reaching operations, it is imperative for TNMCs to develop

more elaborate business strategies in a global context. Global expansion has fundamentally

changed the management of media firms (Hollifield, 2003). This is seen in a variation on

18 the market entry approach taken by TNMCs. For instance, rather than being mere exporters

engaged in the conventional international trade in television programming, they tend to seek

more complex forms of involvement when entering new markets, such as foreign direct

investments, for better control over operations. Foreign direct investment (FDI) refers to the

purchase of sufficient stock in a foreign firm to obtain significant management control

through forms of wholly-owned subsidiaries or joint ventures, while usually requiring the

commitment of resources to operations in unfamiliar environments and thus entailing higher

risks (Agarwal & Ramaswami, 1992; Ball, McCulloch, Frantz, Geringer, & Minor, 2002;

Terpstra & Yu, 1988).

Hollifield (2003) points out a dynamic increase in foreign expansion by media firms,

finding that all the top 10 media firms and at least 64% of the top 25 media firms had some

form of overseas operations or investment by 2002. Media firms also have expanded their

foreign operations with more countries, as Jung and Chan-Olmsted (2005) found that the

total average number of countries in which the top 26 media firms had foreign subsidiaries

increased from 5 to 12 between 1991 and 2002. Further commitment of resources by

TNMCs has been spurred, as governments in emerging economies (e.g., Asia or Eastern and

Central Europe) loosened up media-related regulations and encouraged FDI in media

industries (Li & Dimmick, 2004).

As a result of political regime/climate changes and technological leapfrogs, the

recent economic development in many parts of the world has stimulated the growth of video

markets internationally (Chan-Olmsted & Oba, 2006). In fact, the primary and common

activities that make the aforementioned, three U.S.-based large media firms (Time Warner,

Disney, and Viacom) important global players is television programming, along with motion picture production and film and television program libraries (Picard, 2002). These TNMCs

dominate cable television network ownership in the United States and have aggressively

19 established many foreign subsidiaries and affiliates for their cable networks,1 expanding

their worldwide audiences.

It is quite likely that only TNMCs that possess sufficient financial resources can bear

risks and low returns in the short-term, which often occur in FDI, and eventually develop

networks on a global scale.2 Indeed, in the early 1990s when U.S. cable networks began

expanding their business overseas, it was expected that it would take many years before they evolve into profitable business (Amdur, 1994; Fahey, 1991; Hughes, 1997b). Although it required considerable start-up investment that may not pay off in a short period of time,

TNMCs believed that controlling their own cable networks worldwide would eventually result in better dividends. For about 15 years since then, the TNMCs have continuously exploited new markets around the world and grown steadily. For example, within the period from 1996 to 2001, MTV Networks International’s revenue rose sharply from U.S. $231 million to 600 million (Capell, Belton, Lowry, Kripalani, Bremner, & Roberts, 2002).

U.S.-originated cable networks now occupy important places in multichannel video programming distribution (MVPD) services, such as cable television or satellite broadcasting, in many countries. Cable News Network International (CNNI) owned by

Time Warner can be watched in more than 200 countries and territories. CNNI’s tremendous

1 Cable networks are programming services that deliver packages of information or entertainment by satellite to local cable television system operators. The term “cable networks,” which means cable programmers, is often used interchangeably with “cable channels” or “cable programming services.” Cable programmers provide programming simultaneously to local outlets from a single source, and this is the primary characteristic of networks (Picard, 1993). “Subsidiaries” refer to entities controlled by other firms through ownership of a majority of the voting stock (e.g., wholly-owned subsidiaries), while “affiliates,” which are often used interchangeably with “subsidiaries,” include more forms than just stock ownership (e.g., license agreement) (Ball et al., 2002). In the present study, affiliates are defined as all business entities located in overseas markets and operating as part of the global alliance of a media firm owning cable television networks. 2 Bob Ross, Turner Broadcasting System’s former vice president of international business and network development, acknowledged, “We will all deficit-finance these projects for now, but a company like ours, which will do $2.7 billion this year, can afford to spend $25 million on a long-term investment. At the end of the day, it will be very difficult for small guys to make moves into the global market” (Amdur & Bell, 1994).

20 global reach can be easily realized, given a fact that there were 192 independent states and

73 dependencies, special sovereignty areas, and miscellaneous entities3 in the world as of

August 2005 (Central Intelligence Agency, 2005). Meanwhile, Music Television (MTV)

owned by Viacom reaches more than 340 million households on the globe as the world’s

largest television network. Eight out of ten MTV viewers live outside the United States, and

even CNNI reaches an international audience less than half the size of MTV’s international

audience (Capell et al., 2002). Following CNNI and MTV, many U.S. cable networks have

made inroads into foreign markets and become programmers justly termed as “global

television networks,” which are distinguished from networks that remain within national

boundaries (Chalaby, 2003). Table 1-2 summarizes the number of countries/territories and

households reached by the major cable networks originated in the United States.

The worldwide expansion of U.S. cable networks can be viewed as an epitome of media globalization, not only because they can be watched in many countries on the globe,

but also because they usually have many country- or region-specific programming channels

offered by affiliates established through various market entry approaches. For instance,

MTV Networks had 27 country/region-specific channels offered by 15 affiliates with

several different ownership patterns outside the United States as of 2004 (see Table 1-3).

The extensive geographic operations of global television networks allow

programming developed for a particular market, notably the United States, to be distributed to as many markets as possible within the reach. Furthermore, some programs might be produced on the premise of the global-scale audience. Given a property of television

programming as a public good whose cost is largely invariant to the number of viewers,

global television networks can enjoy great economies of scale in the worldwide distribution

of television programming.

3 Ethnicity, culture, race, religion, and language divide states into separate political entities as much as history, physical terrain, political fiat, or conquest, resulting in sometimes arbitrary and imposed boundaries (Central Intelligence Agency, 2005).

21 Some scholar have associated the worldwide distribution of media products with

“cultural imperialism,” in which Western countries, notably the United States, are supposed

to dominate other countries with an outward flow of cultural products. As a major advocate

for the cultural imperialism theory, Schiller (1976, 1991) argued that the foreign expansion

of U.S. media firms would impose U.S. values onto people in the Third World or periphery

countries, whereby threatening national cultural and communication sovereignty.4 More recently, however, the totalistic cultural imperialism theory has fallen under critique as overly simplistic, since it does not adequately take into consideration local patterns of media consumption (Sinclair, Jacka, & Cunningham, 1996; Straubhaar, 1997; Thussu, 2000).

Theory and evidence support that audiences are more nationalistic, usually showing more preference to cultural products locally produced and suited to their tastes than was thought of according to the cultural imperialism theory (Straubhaar, 1991).

Although it is not the objective of this study to argue the validity of the cultural

imperialism theory, it is noteworthy that the theory is constructed under the premise that

TNMCs would offer the same media products on a global scale, as argued by Schiller

(1991). To be sure, global television networks could distribute the same programs to all

markets. Nonetheless, the fact that a television program is available everywhere does not

necessarily guarantee that it achieves the same level of popularity, let alone acquiring the

same significance, meaning, or response (Street, 1997). Given viewers’ preferences for local

programs, global television networks could also develop and offer local programming in

each market as an alternative programming option so as to meet local demands more

responsively. Straubhaar and Duarte (2004, p.247) articulate that audiences want networks

to talk in their languages, focus on the genres they prefer, show known names (local stars),

4 Whether the exposure to foreign media content has a significant impact on the change in values is open to discussion. Supporting the theory, Salwen (1991) conceded that repeated exposure to Western media messages over long periods of time might alter cultural values subtly. Meanwhile, Elasmar and Hunter (1997) found with their meta-analysis that the impact of foreign television programming on viewers’ values was extremely weak.

22 and demonstrate interest in their market’s idiosyncrasies. Hong (1998) simply states that

people ultimately like to see something close to their lives. What really matters to people and what is really special to them might be programs that respect and respond to their local

tastes.

Meanwhile, Sanchez-Tabernero (2006) assumes that some European or Asian people

might be more familiar with the songs of American artists including Madonna, Eminem,

and so forth than those of artists native to their own countries. In a nutshell, people show a

clear preference for what is closer in many cases but, on other occasion, might be more

familiar with and more likely to consume the far as opposed to the near (Sanchez-Tabernero,

2006). These somewhat contradictory viewpoints would highlight the raison d’etre of

programming services dedicated to specific countries, whereby global television networks could provide both programming standardized on a worldwide basis and programming adapted for local tastes in an eclectic way.

As international communication scholars claim, what clearly distinguishes media

globalization from cultural imperialism is that the former often requires exchanges of power

between global and local actors in a two-way process, involving seemingly antithetical

concepts, such as universalism versus particularlism or homogenization versus

heterogenization (Robertson, 1995; Tomlinson, 1997). Based on these viewpoints, it is quite

probable that global television networks confront differential local market preferences,

while seeking a globally common cultural landscape and opportunities to achieve scale

economies and efficiencies in their global operations.

Gaps in Current Literature

Early research on media globalization mainly focused on policy and macroeconomic

issues, such as its threat to a nation’s identity and cultural traditions as well as to its

domestic media industries. Foreign television programmers’ attempts to transmit on national

territory used to be seen as breaches of sovereignty (Chalaby, 2004a). Meanwhile, a body of

23 research has recently begun to focus on the trend in programming of global television

networks. Studies claim that many of the U.S. cable networks that initially entered foreign

markets with little customized, U.S.-made programs have shifted to offering more locally adapted programming in the markets of Europe (Chalaby, 2002, 2003), Asia (Chan, 2004;

Chang, 2003; Chen, 2004), and Latin America (Sinclair, 2004; Straubhaar & Duarte, 2004).

It now appears that localization is the mantra for many global television networks.

Scholars in those studies consider that local adaptation reflects the difference in cultural

values, which are inherent in each market and hence expected to influence the acceptance of

the U.S. television programming. Some also mention the increasing competition in local

markets as an accelerator of programming adaptation. According to the authors, in order to

survive in the competition with local programmers who attract local viewers with greater

local cultural appeal based in domestic production, global television networks have to offer

more locally adapted programming. Yet, it is still true that in spite of possible disadvantages

resulting from cultural barriers, many global television networks, to greater or lesser

degrees, distribute the same programming on a global scale. The previous studies usually

credit such a trend based on the reason that certain types of programming are less-culturally

sensitive or universally appealing (e.g., HBO’s Hollywood blockbusters).5 In short, those

studies assume that programming by global television networks is in large part determined

based on the cultural framework and the nature of the product.

It is understandable that the impact of culture on the transferability of media

products across markets should be emphasized on the grounds that media products are often

viewed as cultural products. According to Hofstede (2001), culture can be interpreted as the

collective programming of the mind that provides a guide for humans on how to think and

behave and distinguishes the members of one group or category of people from another.

5 It is commonly believed that there is definitely a demand for Western movies in Asia (Osborne, 2000).

24 Given the value inherent in members of a culture, a product accepted by them might not be accepted by the members of a different culture. Craig, Greene, and Douglas (2005) suggest that theatrical films are very much a creation of the culture in which they are developed, since they reflect the writer’s view, the director’s vision, and the performer’s interpretation of the script, all of which are influenced by cultural context. Understanding cultural boundaries is especially important for products that are culture-bound, and this would also be the case with television programs. The value of television programming then is dependent on how audiences appreciate the meaning it expresses. Nonetheless, still open to discussion is whether the international market of television programming operates largely on the cultural factor alone.

In a rapidly changing global economy, the international business might need to be

understood in the context of external environmental factors as well as internal factors at the firm level. What type of programming is offered in overseas markets is determined in a framework of programming strategy employed by a global television network, as a course of action to pursue profitability. More importantly, a strategy is developed through a firm’s deliberate response to its industry and market imperatives as well as the utilization of its internal strengths (Bartlett & Ghoshal, 1991; Zou & Cavusgil, 1996). Dess, Lumpkin, and

Taylor (2004) suggest that the existence of a global product, along with the potential for economies of scale/learning/scope and limited availability of an essential resource, would likely tip the scale toward a global strategic approach, whereas differences in local market preferences, regulations, and widely available resources would encourage a more localized strategy. According to Usunier (1993), whether consumers from similar or different cultures facilitate the introduction of certain strategies or whether managers are the driving force behind the implementation of the strategies remain unclear. In terms of television programming strategies, Domenick Fioravanti, former senior vice president of Discovery

Communications, stated that the success in programming internationally requires not only

25 sensitivity to local markets and a good product but also organizational strengths, long-term

vision, and financial commitment (Walley, 1995).

Yet, relatively little attention in the literature concerning programming of global

television networks is devoted to other external factors besides cultural

similarities/differences across markets. In addition, how intra-firm factors, including

organization structures, corporate climates, or resources, could shape the programming

offered in overseas markets has rarely been discussed. Given the simple fact that

programming is the product of media firms, programming strategy should also be studied

with the exploration of the rationale underlying the offering from business perspectives.

Otherwise, the following phenomenon could not be fully explained: Nickelodeon tried to

create new shows with partners in other countries, while Cartoon Network relied more on

its enormous library (Mifflin, 1995). Both networks are exclusively dedicated to animation

programming but are owned by different TNMCs (Viacom and Time Warner, respectively)

and employ contrasting programming strategies in the overseas market. It may be

reasonable to assume that the difference in intra-firm factors (e.g., business perspectives or

management resources) resulted in the difference in programming.

It should be noted that a few studies view programming in overseas markets more as

a management issue. A series of research by Shrikhande (2001, 2004) discussed competitive

advantage, resource allocation, and alliances by global news networks from strategic

viewpoints, focusing on their programming strategies in the Asian market. Another important research is conducted by Pathania-Jain (1998, 2001). Pathania-Jain analyzed

strategic partnerships between TNMCs and local media firms in India, which significantly

contributed to the development of localized television programming in the market. Yet,

what seems to be still lacking in their studies is the applicability of findings to non-news

networks in the former and to other national markets than India in the latter.

26 Purpose of the Study

The implementation of any given strategy is finally decided by firms. No matter how

sensible or feasible a certain strategy appears to be, it would not be put into practice unless

the decision maker in firms gives it a green light. It is likely that programming could only

be decided after an internal and external analysis has been conducted. This study explores

programming products of global television networks and what factors are perceived as determinants of programming decisions by executives and managers who are in charge of the programming of global television networks, assuming that external as well as intra-firm factors could influence the decisions.

The current study is a descriptive behavioral study to answer questions of how

global television networks behave, i.e., the execution of a certain type of programming, and

why they behave that way rather than a normative behavioral study to answer the question

of how they should behave. The goal, therefore, is to describe the practitioners’ mental

models of how certain television programming strategies are employed in the real world.

Comprehensively and comparably assessing television programming actually offered by

global television networks, the present study would provide a framework for understanding how various factors could affect the decision on television programming.

Compared to many previous studies that discussed the issue of programming, the

present study is different in that it takes into account how external and intra-firm factors

would influence the programming strategy of global television networks. The challenge is,

as Hollifield (2001) claims, to develop models of organizational/managerial decision and

behavior that are grounded in theory and can be applied to explain those of global television

networks. In this regard, researchers on global media management issues have often sought

their theoretical bases in the general strategic management discipline (e.g., Chan-Olmsted &

Chang, 2003; Gershon, 2000; Jung & Chan-Olmsted, 2005). Strategic management usually

includes a wide range of issues. For instance, Yip (1995) suggests that a firm in the global

27 arena makes strategic choices along five strategy levers: market participation, product offerings, location of value-added activities, marketing approach, and competitive moves.

In this study, the issue of product offerings, i.e., television programming, by global television networks is discussed in the context of marketing approach, since product constitutes basic components of a marketing plan as part of the so-called 4Ps (product, price, promotion, and place). Marketing certainly plays an important role in the process of developing and offering products to meet the needs of target markets. According to Kotler and Armstrong (2003), the marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering satisfactions more effectively and efficiently than do competitors. At the same time, products also have to be developed so as to meet the legal and economic requirements of the marketplace. Both practitioners and researchers in the international marketing arena have been confronted with the issue of product offerings, specifically product standardization or adaptation, for decades.

The key to developing a successful international product lies on the applicability or compatibility of the product category to foreign environments and the firm’s ability to incorporate market differences in the product design (Medina & Duffy, 1998). In fact, cable and satellite executives commonly agree that their future success depends on matching the right content with the right market (Bowman, 2003/2004). It, therefore, appears that theoretical frameworks of international marketing strategy concerning product could contribute to building an analytical framework for the programming strategy of global television networks in the present study. In particular, product characteristics, target market segment, country’s cultural characteristics, country’s environmental characteristics, brand and country of origin, industry competition, and firm characteristics are potential factors relevant to the decision of programming strategy in overseas markets, as seen in the next chapter in detail.

28 Although a wide range of goods and services have been investigated as subjects for

the feasibility of standardization or adaptation in the international marketing literature, little

research has been conducted on media products so far. It is noteworthy here that all theories

derived from the international marketing literature might not necessarily be applicable to

television programs with certain unique characteristics, which distinguish them from other

products. For instance, as mentioned earlier, television programs are by nature public goods

and intangible, information goods, which should be distinguished from private goods and

tangible, material goods. As public goods, they assume nonrival and nonexcludable consumption.6 They are also nondepletable goods, which are reused in numerous media

outlets (Reca, 2006). Millions of viewers could simultaneously or sequentially enjoy

watching the same program. In essence, television programs are watched by an additional

viewer with negligible or no additional cost, and large economies of scale can be sustained.

Additionally, most television products are dual goods, which rely on two different revenue

sources: consumers (audiences) and advertisers (Picard, 1989)7, and hence audiences as

well as advertisers could have an impact on media content products.

Meanwhile, the quality of a television program, an experience good, is uncertain and

difficult to assess prior to actual viewing in contrast to a search good (e.g., clothing or

furniture) whose quality is verified by consumers before purchasing. Television programs also have larger social and political impacts than do other types of products, as they play a

significant role in the flow of information in society. Indeed, because of possible social and

political influences, the activities of media firms (e.g., ownership) are often subject to more

regulation. Finally, television programs are very sensitive to cultural specificity and

6 While people are usually rivals when consuming products, this is not the case for television programming. One person’s consumption of a television program does not reduce the quantity available to other people, and any person who values the program is not excluded to consume it (Owen & Wildman, 1992). However, the exclusion of consumers is found in cable programming because of the different forms of payment (Reca, 2006). 7 More precisely, the time dedicated by the audience is sold to advertisers.

29 preference in individual markets. Those distinctions between television programs and other

products should be borne in mind when theories derived from the international marketing

literature discussing other general consumer products are applied to television programs.

In particular, this study focuses on actual programming strategies employed by

U.S.-originated cable networks in overseas markets. As seen earlier, many U.S. cable

networks have become global television networks with extensive expansion in the past 15 years. Although the existence of global television networks originated in other countries

should not be neglected, most of them mainly offer region-specific services and hence are

not as extensive as their American counterparts at present.8 Specifically, it is interesting to

investigate how U.S.-originated cable networks develop programming in Asian markets.

Not only are Asian markets located geographically opposite to the United States on the

globe but also are believed to have environment and cultural characteristics markedly

different from those in the United States. Meanwhile, Asia’s large and growing population,

rising disposable incomes, the emergence of middle class at large, massive industrial

restructuring, and infrastructure development needs have created huge markets for all types

of goods and services. It is broadly believed that a failure to participate in the region’s

economic growth would result in reduced export growth, lost sales, and decreased

profitability (Strizzi & Kindra, 1998).

Rising living standards in Asia, leading to more leisure time, also support the values

in entertainment. Asia is the fastest growing commercial media market. In fact, the world’s

most rapid growth of MVPD services is observed in the Asia Pacific region, as the average

penetration rate in 14 major countries increased from 5.1% in 1991 to 29.7% in 2000

(Zenith Optimedia, 2002).9 Pay TV in Asia has gone from non-existent in the late 1980s to a

8 Perhaps, the most remarkable exception is BBC World, which is originated in the United Kingdom and covers 258 million households in more than 200 countries and territories (BBC World, 2005). 9 Countries included are Australia, People’s Republic of China (China), Hong Kong Special

30 U.S. $15 billion industry as of 2003 (Bowman, 2003). Yet, the growth of MVPD services has been so rapid that demand for programming may still be high and outstripping the

supply of content in many Asian markets. In essence, the Asian markets for cable and

satellite services are relatively untapped compared with their American and European

counterparts and hence are viewed as the engine for further growth for U.S.-originated cable

networks as well.

It is probably true that Asian countries have a lot more in common among them than with the West. For example, they may share similar moral values and the concept of family unit. However, seen at the micro level, the region is also a complex mosaic of a large variety of cultures and languages. Due to the cultural and language diversity within the region,

U.S.-originated cable networks might hesitate to distribute programming on a regional base for Asian countries, unlike for Latin American countries where pan-regional programming

is successful. Moreover, the markets actually vary widely in economic development and

infrastructure, ranging from established and highly developed markets such as Japan to

emerging and less developed markets such as Vietnam. Some have excellent infrastructures,

whereas others have poor infrastructures. In fact, the degree to which cable television industries and advertising markets have developed varies greatly across Asian countries

(Oba & Chan-Olmsted, 2005). According to Tai (1997), Asia is really a series of localized

markets with their own characteristics rather than a region. There might be no single Asian model for global television networks in the region stretching from India to Japan.

Additionally, U.S.-originated cable networks’ activities in Asia are also likely to be

restricted by national gate-keeping policies, the forces of increasing local competition, and

the dynamics of audience preference (Chadha & Kavoori, 2000). In most Asian markets, the

Administration Region of China (Hong Kong), India, Republic of Indonesia, Japan, Republic of Korea (South Korea), Malaysia, New Zealand, Islamic Republic of Pakistan, Republic of the Philippines, Republic of Singapore, Republic of China (Taiwan), and Kingdom of Thailand. Although Hong Kong is considered a part of China officially, it is treated as a separate national entity in the study.

31 U.S. programming, which accounts for at least 75% of all television exports (Hoskins,

McFadyen, & Finn, 1997), is hardly aired in primetime on the leading broadcast stations

with the only exception of feature films (Godard, 1994; Waterman & Rogers, 1994). Taken

together, it can be safely said that the Asia region provides the most attractive but toughest markets for U.S.-originated cable networks to approach.

The present study will examine how U.S.-originated cable networks develop and

decide their television programming products in Asian markets, along with the magnitude of

various factors affecting the decision, in order to understand a realistic picture of the media

firm’s global activities. The rest of the dissertation is organized as follows. The next chapter reviews the international marketing literature to understand the conceptual framework on product standardization and adaptation. In particular, special concerns are given to external and intra-firm determinants, which may influence the decision on product standardization/adaptation in the context of international marketing. Chapter 3 discusses how those factors might be applicable to television programming products on the basis of the fundamental theories found by media economics, management, and globalization research. Additionally, research questions for the study are presented in the chapter. Chapter

4 describes the research design, focused on data collection and analysis method and the selection of individual networks and markets for this study. Chapter 5 presents the findings of the study. Finally, the study is concluded in Chapter 6, proposing a summary of findings and implications, some limitations of the study, and directions and suggestions for future research.

32 Table 1-1. Shares of revenues by countries/regions in the top three TNMCs. (In U.S. million dollars; % in Total) Time Warner Year 2002 Year 2003 Year 2004 United States 30,516 (82.3) 32,123 (81.2) 33,573 (79.8) United Kingdom 2,059 2,194 2,507 Germany 919 1,239 1,161 Japan 562 577 685 France 572 773 879 Canada 345 413 503 Others 2,087 2,244 2,782 (International Subtotal) 6,544 (17.7) 7,440 (18.8) 8,516 (20.2) Total 37,060 (100.0) 39,563 (100.0) 42,089 (100.0) Disney Year 2002 Year 2003 Year 2004 United States/Canada 20,770 (82.0) 22,124 (81.8) 24,012 (78.1) Europe 2,724 3,171 4,721 Asia Pacific 1,325 1,331 1,547 Latin America & Other 510 435 472 (International Subtotal) 4,559 (18.0) 4.937 (18.2) 6,740 (21.9) Total 25,329 (100.0) 27,061 (100.0) 30,752 (100.0) Viacom Year 2002 Year 2003 Year 2004 United States 16,330 (85.1) 17,488 (84.0) 18,812 (83.5) United Kingdom 647 706 910 Other Europe 972 1,182 1,324 Canada 659 771 853 All Other 578 681 627 (International Subtotal) 2,857 (14.9) 3,340 (16.0) 3,714 (16.5) Total 19,187 (100.0) 20,828 (100.0) 22,526 (100.0) Source: Time Warner Inc. (2005a); Viacom Inc. (2005a); Walt Disney Co. (2005).

Table 1-2. Global reach by U.S.-originated cable networks. Number of Number of Year countries/territories households Cartoon Network 160 N/A 2005 CNBC 101 210 million 2005 CNN International 200+ 170 million+ 2005 Discovery Channel 160+ N/A 2004 Disney Channel N/A 116 million 2004 ESPN 192 N/A 2005 Hallmark Channel 122 125 million 2005 HBO 50 N/A 2004 History Channel 130+ 230 million+ 2005 MTV 140 340 million+ 2005 Nickelodeon 149 300 million+ 2005 Source: Discovery Communications Inc. (2004); National Cable & Telecommunications Association (2005); Time Warner Inc. (2005b); Viacom Inc. (2005b, c); Walt Disney Co. (2004a).

33 Table 1-3. MTV’s country/region-specific channels and ownership patterns. Affiliate Ownership pattern Channel Main markets MTV Europe Wholly-owned subsidiary MTV UK/Ireland U.K., Ireland MTV Netherlands Netherlands MTV Spain Spain MTV France France, Switzerland MTV Central Germany, Austria MTV Portugal Portugal MTV Nordic Nordic Countries MTV European Hungary, Czech MTV Italia Joint venture MTV Italia Italy MTV Poland Joint venture MTV Poland Poland MTV Romania Licensing agreement MTV Romania Romania MTV Russia Joint venture MTV Russia Russia, Belarus MTV Latin America Wholly-owned subsidiary MTV North Mexico MTV Central Chile, Venezuela MTV South Argentina MTV Brazil Joint venture MTV Brazil Brazil MTV Asia Wholly-owned subsidiary MTV Taiwan Taiwan MTV SAM Singapore, Malaysia MTV India India, Pakistan MTV China China, Hong Kong MTV Indonesia Joint venture MTV Indonesia Indonesia MTV Japan Joint venture MTV Japan Japan MTV Korea Joint venture MTV Korea South Korea MTV Philippines Joint venture MTV Philippines Philippines MTV Thailand Joint venture MTV Thailand Thailand MTV Australia Licensing agreement MTV Australia Australia MTV Canada Licensing agreement MTV Canada Canada Source: Viacom Inc. (2004).

34 CHAPTER 2 LITERATURE REVIEW Theoretical Backgrounds for Product Standardization/Adaptation

The theoretical frameworks underlying the foundation for international marketing of

products are presented in this chapter. The main purpose of any business is to create and

retain profitable customers. It does so by offering goods and services for which there is a

demand or potential demand. A market consists of all the potential consumers sharing

particular needs or wants and being willing and able to engage in exchange to satisfy those

needs or wants (Kotler, 1994).10 According to Drucker (1977), in order to create a customer, the business enterprise has two basic functions: marketing and innovation. Marketing is defined as a commercial process, involving developing, promoting, distributing, and selling products, undertaken by a firm in an attempt to satisfy the consumers while attaining organizational objectives as to relate profitability to the market.

The basic nature of marketing might not change when it extends beyond national

boundaries, but international marketing, unlike domestic marketing, requires operating simultaneously in more than one environment. Although marketing decisions must be made

no matter where business is conducted, the environment within which these decisions are

made might be unique to each country. Markets served often differ widely because of the

great variations in the uncontrollable environmental forces, such as culture, competition,

legal requirements, government controls, and climate, and the differential of environment

distinguishes international marketing from domestic marketing (Cateora & Graham, 2001).

International marketing, therefore, requires operating across foreign country markets in

which uncontrollable elements may significantly differ from one country to another, even

though marketing principles and concepts are universally applicable. It is, nonetheless,

noteworthy that all international marketers should not only focus on differences to adjust

10 In economics, the market typically refers to a collection of sellers and buyers who transact over a particular product.

35 marketing programs to make them accepted by the consumers in various markets but also seek out similarities in order to identify opportunities to implement the same marketing

strategy.

A substantial body of international marketing literature, abound in studies focusing

on numerous differences and similarities across national boundaries and firm characteristics,

may ground our understanding of the issue as to what products are developed and offered by

firms in overseas markets and the rationale underlying the decision. In particular, in the

sense that television programming can be defined as a product offered in a market to satisfy

the consumer’s wants and needs, it is the premise of the present study that the international

marketing theory is fundamentally applicable to television programming as well as to other

types of consumer products, although not entirely, due to unique characteristics pertaining

to television programming products, discussed in the previous chapter.

For the marketing mix consisting of a set of strategic decisions made in the areas of

product, promotion, pricing, and distribution, roughly two contrasting approaches would be selectable when a firm makes inroads into the international marketplace. One is

“standardization,” which means in a literal sense that the same products are sold in the same way on a global scale as if the entire world were a single entity rather than a collection of national markets (Levitt, 1983). Full standardization of marketing strategy, aside from the feasibility, refers to the worldwide offering of identical products lines and features at identical prices through identical distribution services supported by identical promotion programs (Baalbali & Malhotra, 1993; Buzzell, 1968). In other words, marketing standardization is the standardization of the pattern of resource allocation among marketing mix variables across national markets (Szymanski, Bharadwaj, & Varadarajan, 1993).

Another is “adaptation” or “customization,” with a distinct strategy being tailored to

local customs and market conditions, pointing to culturally, economically, and politically

distinctive differences among nations (Hill & Still, 1984; Quelch & Hoff, 1986; Wind,

36 1986). The term “adaptation” is often used in conjunction with or in lieu of the term

“customization.”11 The decision to whether standardizing or adapting marketing strategy

has actually been a vexing question with which academicians as well as practitioners have

wrestled since the 1960s, given the fact that the choice of either of the two approaches has

an impact on the competitiveness of firms engaged in international markets (Buzzell, 1968;

Jain, 1989).

Specifically, the main issue in international marketing centers on the different

effectiveness of “product” standardization versus adaptation. In fact, aside from a large

body of research in the advertising arena, which is organized comprehensively by various

scholars (e.g., Agrawal, 1995; Onkvisit & Shaw, 1987; Papavassiliou & Stathakopoulous,

1997), product has drawn more attention in the standardization/adaptation literature than

other elements of the marketing mix (Baalbaki & Malhotra, 1993; Shoham, 1995; Terpstra

& Sarathy, 2000; Waheeduzzaman & Dube, 2004). Marketing is a major functional area

when firms attempt to translate market information effectively and efficiently into product

concepts and position the product offerings in the target market (Song, Montoya-Weiss, &

Schmidt, 1997; Xie, Song, & Stringfellow, 2003). The product program of marketing mix is

fundamental in strategy development on the grounds that product possesses inherent

attributes that consumers value and, if the product fails to satisfy the needs of consumers, no

amount of promotion, price cutting, or distribution would persuade them to purchase (Ball

et al., 2002; Medina & Duffy, 1998).

When a firm selects a business-level strategy, competitive advantage is viewed as a position of superior performance that the firm attains through offering either undifferentiated products at low prices or differentiated products for which customers are

11 Medina and Duffy (1998), however, point out a difference. Adaptation relates to changes attributed to mandatory requirements, whereas changes in customization are optional to the firm. In this dissertation, the term “adaptation” is mainly used, since it is generally perceived as the opposite of standardization in the international marketing literature.

37 willing to pay a premium price (Porter, 1980, 1985). This perspective is likely to apply to the choice of product standardization or adaptation, as the challenge for international marketers is, roughly speaking, the trade-off between scale economies resulting from standardization and the exogenous prerequisites of local adaptation. It makes business sense that a firm would prefer product standardization if possible, due to the obvious scale economies and operational efficiencies gained by sharing of resources and coordination and cooperation across national boundaries.

The standardization/adaptation issue in international marketing came to the forefront with Levitt’s controversial article (1983). Levitt claimed that a firm should operate and sell the same things in the same way everywhere, emphasizing the scale effects that transcend national boundaries and provide cost advantages to firms. In terms of cost reduction and operational efficiency, it is likely that firms, which sell standardized products everywhere in the world, would have advantage over the competitors, which treat individual national markets separately and sell different products for each market. According to Usunier (1993), standardization is undertaken to accommodate cost pressure at the expense of respecting the distinct characteristics of each market.

Furthermore, a firm could project a uniform image of the brand by developing a product worldwide, seeking to establish its international image. Sorenson and Wiechmann

(1975) discovered that brands were usually highly standardized, both because of trademark considerations and because of the apparent desire of most managers to have recognizable worldwide brand franchises, which could be an intangible resource. If a tourist from a country, for example, finds his or her accustomed brands at a store abroad, he or she is likely to buy them during his or her visit (Alashban, Hayes, Zinkhan, & Balazs, 2002;

Buzzell, 1968; de Chernatony, Halliburton, & Bernath, 1995). Buzzell (1986) further assumes that the tourist’s re-exposure to the products may strengthen his or her loyalty back home and protect him or her from the temptation to change his or her allegiance to a

38 competitor. Moreover, Quelch and Hoff (1986) claimed that high quality products and good

ideas tend to have a universal appeal and, therefore, should be sold or used as standardized

products as widely as possible. It is inferred from these perspectives that firms would

actively employ product standardization as the global strategy in the case where it is

feasible.

Yet, full standardization appears naïve and oversimplistic, since it ignores the

inherent complexity of international operations and the formulation of an effective strategy to penetrate foreign markets, which are culturally, economically, or institutionally diverse

(Douglas & Wind, 1987). Even if a product is available everywhere, it does not imply that the product achieves the same level of acceptance in every market. In fact, even products that look similar worldwide actually have at least subtle country-by-country variations that can make a difference in their success (Kotler, 1986). It is noteworthy that even Levitt

(1983), a powerful proponent of global standardization, acknowledged that a firm, though reluctantly, might sometimes need to consider product adaptation for the requirements of individual markets. In the effort to satisfy local consumer needs and wants, product modification might need to be implemented along with separate product lines.

Nonetheless, full adaptation, another extreme approach, may not be desirable, since

it eliminates all the possible synergies among various country operations (Wind, 1986).

Bartlett and Ghoshal (1991, 2000) contend the necessity to converge globalizing and

localizing forces together so that a firm can achieve global integration efficiently and

national flexibility simultaneously. The convergence is oftentimes referred to as

“glocalization,” in which certain elements are standardized, and other elements are localized.

In essence, the best strategy can be “think globally, act locally” (Kotler, 1986; Wind, 1986).

It is, however, not an easy task to balance the gains of product standardization strategy against the needs of heterogeneous national markets (Buzzell, 1968).

39 Furthermore, still controversial is the relationship between product standardization

and financial performance. Advantages of product standardization are seen in cost savings

among others, as discussed previously. Yet, Walters (1986) and Whitelock and Pimblett

(1997) assume that the critical issue, which should be considered by marketers, is not whether standardization can lead to cost savings but whether it can lead to improvements in

profitability or other long-term outcomes. Obviously, profitability depends not only on costs

but also on sales. In this regard, Buzzell (1968) speculated that even if cost savings accruing

from product standardization were attained at the expense of lower sales in some overseas

markets, the net effect on profits might be positive. To the contrary, some scholars assumed

that local adaptation would result in profit maximization (e.g., Douglas & Wind, 1987;

Kotler, 1986; Quelch & Hoff, 1986; Rau & Preble, 1987). According to them, product

adaptation, whether mandatory or discretionary, can strengthen the product’s competitive

position in the marketplace, lead to higher sales, and hence is worth the additional costs.

The issue is how a firm can balance cost saving from standardizing products against

the potential loss of sales that may result from not adapting them to local tastes or from

failing to fully exploit significant differences among markets. In essence, the ultimate

relevance of standardization/adaptation should be determined based on its economic payoff

(Jain, 1989; Samiee & Roth, 1992). If a standardization strategy does not provide value to

the market, it is less likely to increase sales, and if the standardization strategy is unable to

increase sales or to achieve its desirable response, the investment in the strategy

inefficiently employs a firm’s valuable resources (Ryans, Griffith, & White, 2003). Yet, only

a few marketing studies have actually explored the effect of product standardization on economic performance. Douglas and Craig (1992) attributed the lack of convergence on global standardization to the lack of empirical support for the fundamental propositions that global marketing strategy affects a firm’s financial performance.

40 Even among a few empirical studies, the relation between standardization/adaptation and financial performance is inconsistent. Samiee and Roth (1992) investigated the relationship between product standardization and financial performance, which are indicated by return on investment, return on assets, and sales growth, and found no significant results. Cavusgil and Zou (1994), Shoham (1996), and Szymanski et al. (1993) documented the performance enhanced substantially through product adaptation strategy.

On the contrary, according to O’Donnell and Jeong’s empirical study (2000), global standardization leads to superior performance in the context of high-tech, industrial products. Likewise, Waheeduzzaman and Dube (2002) found that standardization positively contributed to firm performance both in terms of return on sales and sales growth.

Determinants of the Degree of Product Standardization/Adaptation

Provided neither full standardization nor full adaptation of products might be feasible or desirable, many firms presumably have to choose their product policies lying somewhere on a continuum from full standardization to full adaptation in their overseas operations. Significantly, many scholars (e.g., Baalbaki & Malhotra, 1995; Boddewyn,

Soehl, & Picard, 1986; Buzzell, 1968; Cavusgil, Zou, & Naidu, 1993; Jain, 1989; Quelch &

Hoff, 1986; Ryans et al., 2003; Samiee & Roth, 1992; Sorenson & Wiechmann, 1975;

Walters, 1986) perceive the notion of standardization and adaptation as two ends of the same continuum, claiming that the decision is not a dichotomous, either/or one but a matter of degree. The higher the degree of standardization, the lower the degree of adaptation, and, as Loyka and Powers (2003) suggest, standardization and adaptation are not always mutually exclusive.

Furthermore, scholars (e.g., Agrawal, 1995; Boddewyn & Hansen, 1977; Cavusgil et al., 1993; Lemak & Arunthanes, 1997; Wang, 1996) advocate a contingency perspective in which the degree of standardization or adaptation is contingent upon a variety of factors and the ability of a firm to choose the strategy that matches the factors. Wang (1996) notes that

41 the contingency theory is widely accepted in the research area of strategic management, assuming that there is no universal set of strategic choices that is optimal for all business of firms regardless of their respective infrastructures, positions, and environmental context.

The framework premises that no strategy is the best across situations but each strategy might be the best in the particular situation, supporting Walters’ suggestion (1986) that the possibility for and attractiveness of standardization or adaptation strategy is very situation-specific. Firms, therefore, need to consider various factors at the country, industry, and company level when making any decision on product standardization or adaptation in foreign markets (Waheeduzzaman & Dube, 2004).

The degree of product standardization/adaptation can be affected by a variety of

external and intra-firm factors (Baalbaki & Malhotra, 1993; Cavusgil & Zou, 1994; Jain,

1989; Johnson & Aruthanes, 1995; Waheeduzzaman & Dube, 2004; Walters, 1986). Table

2-1 summarizes a list of representative academic studies that discussed the product-related

factors. In spite of the subtle differences among the studies cited in terms of definition,

measurement, or context of research (e.g., the export marketing research or the

standardization/adaptation research), the factors can be roughly grouped into the followings:

product characteristics, target market segment, country’s cultural characteristics, country’s environmental characteristics, industry competition, brand and country of origin, and firm characteristics. Whenever a manager undertakes the responsibility of marketing a product in

the international market, he or she should be aware of these factors and their implications on

marketing strategy (Baalbaki & Malhotra, 1995). Firms may have to relinquish full

standardization and alternatively pursue product adaptation to some degree if any factors

militate against standardization. Given the degree of standardization versus adaptation being

a function of the factors above, what approach is more realistic and feasible for a firm in the

global marketplace needs to be discussed in light of the influence of each factor.

42 Product Characteristics

It is possible that the feasibility of product standardization actually varies with the nature of the product, in particular its cultural specificity. Many studies (e.g., Ballbaki &

Malhotra, 1993; Boddewyn et al., 1986; Cavusgil et al., 1993; Hill & Still, 1984; Jain, 1989;

Quelch & Hoff, 1986; Samiee & Roth, 1992) suggest that standardization would be more feasible for industrial goods, which are less culturally sensitive, than for consumer goods, which are oftentimes culture-bound. This is partly because industrialization has been accompanied by trends to disguise or screen out cultural odors, leading to a relatively homogeneous demand for industrial goods across markets, and partly because business buyers are more rational and objective in their seeking of the best value for money

(Boddewyn et al., 1986; Cavusgil et al., 1993; Samiee & Roth, 1992). Johnson and

Arunthanes (1995) actually found that levels of product adaptation were significantly higher for consumer goods than for industrial goods.

Furthermore, among consumer goods, durable goods, such as automobiles or high-tech products, which symbolize the essence of modernism and meet a relatively universal need, are considered more appropriate for standardization than nondurable goods, such as food products, which are more appealing to attributes unique to local cultures

(Baalbaki & Malhotra, 1993; Boddewyn et al., 1986; Jain, 1989). In Boddewyn and

Hansen’s study (1977), it was discovered that important obstacles to standardization of marketing strategies were differences in consumer tastes and habits for nondurable goods.

Baalbaki and Malhotra (1995) found that nondurable goods were affected by a wide array of market-specific forces influencing the marketing environment.

Overall, when a culture-specific product is introduced to a foreign market, the cultural base on which the product was originally developed may not match the cultural base in the foreign market, and therefore the product needs to be adapted to the cultural idiosyncrasies of the foreign market (Cavusgil & Zou, 1994; Douglas & Wind, 1987). As

43 Cavusgil et al. (1993) and Cavusgil and Zou (1994) discovered, product adaptation is

influenced significantly and positively by cultural specificity of product. Products that are

highly culture-bound are more difficult to market globally and do not enjoy high-scale

economies and efficiencies. Meanwhile, Huszagh, Fox, and Day (1985) had a somewhat

different perspective, claiming that products, which were perceived as having no close

substitutes and as being essential by consumers, irrespective of their cultural specificity, can

be potential candidates for standardization. A product that meets a universal need requires

little adaptation across markets, and standardization is facilitated (Levitt, 1988).

Target Market Segment

Marketers should identify and select a target market (a group of consumers), which

shares common characteristics, and develop a product that will satisfy it. As a ground for

the feasibility of globally standardized products, Levitt (1983) placed an emphasis on the

convergence of consumer markets worldwide or the emergence of global consumer markets

for standardized products, which was triggered by the homogenization of the world’s needs

and desires for world-standard modernity in all things at aggressively low prices. As a

consequence, a firm could view the world as a distinctive product market rather than as a

collection of diverse markets.

Many studies (e.g., Agrawal, 1995; Boddewyn et al., 1986; Buzzell, 1968; de

Chernatony et al., 1995; Douglas & Wind, 1987; Eger, 1987; Levitt, 1983; Rau & Preble,

1987; Simon-Miller, 1986; Whitelock & Pimblett, 1997) identify the development of

communication technologies, coupled with expanded overseas travel, as a key factor for the

homogenization of the world population. This is largely because what people see, hear, and

access via media content, flowing primarily from the United States, could positively shape

their needs and attitudes toward the consumption of products, increasing expectation about

the good life and establishing new models of consumption, which may be alluringly depicted in the content (Alden, Steenkamp, & Batra, 1999; Jain, 1989; Roth, 1995; Walker,

44 1996).12 Even highly isolated tribal cultures may find it increasingly difficult to insulate

themselves from Western materialism (Demers, 2001). In essence, the media content could

promote consumerism by emphasizing what is considered to be a modern lifestyle.

Those assumptions are based on the premise that standardized media products are

offered worldwide, appealing to human fundamental needs, desires, and motivations,

bringing on consumer convergence, and also facilitating the permeation of other

standardized consumer products. Walker (1996) concludes that worldwide access to

television creates a global culture of consumption, what he refers to as a “global mall.” The emergence of homogeneous consumer markets is also likely to further provide media firms with an opportunity to present standardized media products. In short, standardized media content could play a dual role in global consumer markets: leading to global consumption homogenization and consumer culture and then being demanded by global consumers.

Levitt (1983) advocated the possibility to identify target consumer segments across

national boundaries that were similar and represented a homogeneous market and to search

sales opportunities in the segments to achieve the economies of scales. It is possible that

countries, in particular developed ones, are layered with a large number of economic and

social segments, which may cause an increasing diversity of social norms, personal

lifestyles, and purchasing behaviors within a country. Thus, as Wind and Douglas (1972)

suggested, collective national characteristics alone might not be enough to provide an

adequate base for segmentation. Selling products to urban and rural consumers within the

12 This viewpoint can be associated with “modernization theory,” advocated actively by communications scholars in the 1960s. They claimed that international mass communication could be used to spread the message of modernity and transfer the economic and politic models of the West to the newly independent countries of the East or South (Thussu, 2000). According to Lerner (1958) and Schramm (1964), early exponents of the theory, exposure to international media was expected to make societies less bound by tradition and make people aspire to a new and modern way of life. Although it is possible that the media presentation plays a role as guidelines for the affluent nation, it is unproven if this leads to the disintegration of traditional sectors, as modernizers asserted.

45 same borders might be more difficult than doing so in cities across country borders. In fact,

Hill and Still (1984) found that less product adaptation was required in urban areas than in semi-urban and rural areas, though in less developed countries.

Baalbaki and Malhotra (1993) articulate that the standardization versus adaptation

debate can be resolved only by determining whether or not “intermarket consumer

segments” exist. Samiee and Roth (1992) define the concept of intermarket segments as the

presence of well-defined and similar clusters across national boundaries that have the same

characteristics and are identified by similar criteria. It is assumed that a market segment

might be more similar to the same segment in other countries with respect to economic

status, purchasing behavior, tastes, preferences, or lifestyle than it is to the rest of the

segments on the same country.

Such segments include the information seekers (Thorelli, Becker, & Engledow,

1975), the urban dwellers (Hill & Still, 1984), the global elite lifestyle segment (Hassan &

Katsanis, 1991), the global teenage segment (Hassan & Katsanis, 1991), the working women (Douglas & Urban, 1977), the pro trade consumer segment (Crawford, Garland, &

Ganesh, 1988), the pro energy conservation segment (Verhage, Dahringer, & Cundiff, 1989), to name a few. For instance, products with a modern lifestyle image would penetrate faster in the urban consumer segment than in rural residents across countries (Hill & Still, 1984).

Teenage products can be targeted globally in response to homogeneous teenage consumer

desire for novel, trendy designs and image but not to other generations (Hassan & Katsanis,

1991). In essence, the success of product standardization may in part premise the presence

of intermarket segments across countries at which a firm can target its products and in particular, as Douglas and Wind (1987) and Sheth (1986) suggest, the size and economic

46 viability of the segments and the strength of the segment’s preference for the global brand

and product.13

Country’s Cultural Characteristics

In contrast to the intermarket segments in isolation of country-specific contexts,

which ignore national differences (Levitt, 1983), country characteristics are in large part

attributed to differences inherent in each country. In other words, they are characteristics,

which might be shared commonly by all customers of a given country and could eventually

affect general preference and demand in the country. Actually, countries are often used as

the level of segmentation in the international marketing (van den Berg-Weitzel & van de

Laar, 2001). Given the possibility to group the world market into some smaller but

relatively homogeneous country-clusters, the ability of firms to pursue global

standardization may hinge on the degree to which markets of countries have similar

characteristics (Boddewyn & Hansen, 1977; Buzzell, 1968; Hill & Still, 1984; Jain, 1989;

Wang, 1996). The smaller market heterogeneity among countries, the more attractive and

feasible product standardization can be.

Specifically, scholars (e.g., Boddewyn & Hansen, 1977; Hill & Still, 1984; Jain,

1989; Walters, 1986; Wind & Douglas, 1972) suggest that differences in culture can affect acceptance of marketing standardization. As mentioned in the association with product characteristics, differences between national cultures possibly influence product adaptation decisions, in particular for consumer products, since culture, encompassing all the activities of social heritages (Cateora & Graham, 2001), is the basis on which people think and behave in a similar or different way. According to Harris and Moran (2000), culture gives people a sense of who they are, of belonging, of how they should behave, and of what they

13 Wang (1996), however, argues that the mere existence of global consumer segments does not always indicate the identical behavior pattern across the countries. Although their identifiable characteristics are distinctive enough to transcend national boundaries, they also show some different and even opposite attitudinal and behavioral patterns due to intercultural variances (Thorelli et al., 1975).

47 should be doing, providing a learned, shared, and interrelated set of symbols, codes, and

values that direct and justify human behavior. Culture would eventually have important

impacts on consumers’ needs, motivations, the attributes they value, preferences, the

principals whose opinions the consumers accept, product choices, and purchasing and

consumption patterns (Jain, 1989; Wind & Douglas, 1972). Cultural boundaries, therefore,

can act as barriers to one global market and impede the flow of ideas, communication, and

product from one culture to another (Craig et al., 2005; Kale, 1995).

Cross-cultural marketing is defined as the strategic process of marketing among

consumers whose culture differs from that of the marketer’s own culture at least in one of

the fundamental cultural aspects, such as language, religion, social norms and values,

education, aesthetics, and the living style. In order to match the product with consumer preferences, purchasing behavior, and product-use patterns in a potential market, marketers must understand and take into account thoroughly the heterogeneous characteristics and cultural differences in countries (Whitelock & Pimblett, 1997; Wind, 1986). To put it in the other way around, cultural similarity and compatibility between countries can be associated with the high feasibility of product standardization.

Wind and Douglas (1972) also argued that different cultures were characterized by

different degrees of receptivity toward change, influencing the willingness to accept new products and ideas. In fact, a new product might enjoy rapid acceptance in one country but not in another country. Then, it is important to consider how consumers in different cultures

may respond to new product introductions. The elements of culture that may inhibit such

change include belief systems, stemming mainly from traditional sectors, such as religion or

superstition, and affecting an individual’s outlook upon life (Whitelock & Pimblett, 1997).

Any idea perceived as new by a group of people is innovation, and the process by

which a product innovation is accepted among the members of a social system over time is

product diffusion (Rogers, 1983). Diffusion is facilitated not only by such product-related

48 characteristics as relative advantage, compatibility, complexity, trialability, and

observability, but also by market-related characteristics. Given the country’s values that

have long been identified as a factor that influences consumer behavior, it is reasonable to speculate that these values influence the diffusion of innovations in a society as a whole

(Dwyer, Mesak, & Hsu, 2005). The more consistent that product perceptions would be with

current cultural values, the less resistance there would be and the more rapid diffusion or

acceptance could be.

Consumers in some countries may be on average higher in innovativeness than

consumers in other countries. Wherever consumers are open to accepting new products due

to their social and cultural traits, diffusion becomes faster. Then, an important first step in

adapting a product to a foreign market is to determine the degree of newness as perceived by the target market. In order to explore how innovation spreads throughout national cultures and to identify cultural characteristics that affect countries’ receptiveness to the innovation, Dwyer et al. (2005) use Hofstede’s multidimensional cultural index scores

(2001) as an insightful means. Although Hofstede’s research was conducted in organizational settings, an index of scores for each dimension that he identifies has been associated with consumer behavior in many countries. Dwyer et al. (2005) assume that the diffusion rate of product innovations would be higher in low-uncertainty-avoidance,14

collectivistic,15 masculine,16 high-power-distance,17 and short-term-orientated cultures.18

14 Uncertainty avoidance is the extent to which the members of a culture feel threatened by uncertain or unknown situations. Uncertain avoidance describes the cultural pattern of seeking stability, predictability, and low stress rather than change and new experiences (Hofstede, 2001). Strong uncertainty avoidance, therefore, might be associated with resistance to innovation whose functional attributes can be considered as unknown entities (Dwyer et al., 2005). 15 Cultures that emphasize collectivism exhibit patterns of group or collective thinking and acting while individualism is an aspect of culture that pertains to people’s tendency to value personal and individual time, freedom, and experiences (Hofstede, 2001). The nature of collectivist cultures where the social network serves as the main source of information could provide more opportunities for communication among their members regarding new

49 Country’s Environmental Characteristics

Some scholars (e.g., Hill & Still, 1984; Jain, 1989; Wind & Douglas, 1972) suggest

that differences in economic development levels, as well as those in cultures, can affect

acceptance of marketing. In addition to the economic difference between countries, Jain

(1989) identifies several types of environmental differences as important concerns affecting

the direction for standardization or adaptation decision of firms: physical, legal, and

infrastructure and supporting environments. Standardization appears feasible where those

environments are most alike (Boddewyn & Hansen, 1977; Jain, 1989; Keegan, 1969;

Sorenson & Wiechmann, 1975).

Economic condition

It is likely that the demand for products can vary according to the level of economic

development indicated by gross national product (GNP) per capita, disposable income,

purchasing power, and the like (Jain, 1989; Loyka & Powers, 2003; Wind & Douglas, 1972).

Product standardization may be more feasible among countries that are economically alike. product introductions, increasing the efficiency of the communication process (Dwyer et al., 2005). 16 The dominant values of a masculine society are achievement and success, while those of a feminine society are caring for others and quality of life (Hofstede, 2001). Masculine societies tend to have high status positions reserved for men, while feminine societies have more equal distribution of gender roles. The materialistic, possession-oriented nature of masculine cultures suggests that the acquisition of goods and, in particular, new products is valued in these societies (Dwyer et al., 2005). 17 Power distance refers to the extent to which less powerful members of a society accept and expect that power is distributed unequally (Hofstede, 2001). In high power distance cultures, people have their right places in a social hierarchy, accept authority naturally, and emphasize the importance of prestige and wealth in vertical relationships between social and economic classes. In low power distance cultures, people stress equality in rights and opportunities. The acquisition of new product innovations by the powerful (and typically more wealthy) members in a high-power-distance society influences the less powerful members’ purchase decisions (Dwyer et al., 2005). 18 Long-term orientation is related to the extent to which a society exhibits a pragmatic future oriented perspective. Whereas cultures with short-term orientations expect quick results, those with long-term orientations prefer a steady progression toward long-term goals (Hofstede, 2001). Short-term-oriented cultures show sensitivity to social trends in consumption in contrast to long-term-oriented cultures emphasizing savings and the frugal use of resources (Dwyer et al., 2005).

50 Poor economics in less developed countries may make physically impossible for a majority

to buy products that U.S. consumers consider essential (Jain, 1989; Whitelock & Pimblett,

1997). Ohmae (1985) pointed out that consumers in the Triad countries (the United States,

Western Europe, and Japan), which constituted the major world markets accounting for the

bulk of product, possibly became fairly homogeneous and fitted for globalization, thus

making opportunities for product standardization more likely.

It is, however, still uncertain whether or not people in economically similar

countries are necessarily similar in product choice and consumption behavior. In spite of the

convergence of economic systems, there is no evidence of the convergence of people’s value systems (de Mooij, 2000), in accordance with Barker’s assumption (1993) that there perhaps exist divergent attitudes toward consumption even among European countries.

Huszagh et al. (1985) indeed found in an empirical study that even within a group of countries clustered on the basis of economic and social welfare variables, significant difference existed in product acceptance. Meanwhile, economic ability could be the market-related characteristics influencing the speed and diffusion patterns of products

across countries (Cateora & Graham, 2001). A new product may fail if the consumers

cannot afford it. In contrast, high standard of living may be associated with faster adaptation

rates (Rogers, 1983).

Physical/geographic condition

Buzzell (1968) paid attention to differences among countries arising from such

physical conditions as climate, topography, and geography. Those physical conditions are, by nature, not subject to change, and firms have no control over them. Therefore, differences in climate may require some additional features for cars or air conditioners, and

those in the size and configuration of homes may influence product design for appliances

and home furnishing. For instance to illustrate the latter, as homes in many foreign countries

51 are typically small by American standards, some U.S. appliances or home furnishing could

be scaled to sizes appropriate to different environments.

Furthermore, geographic proximity is a driving factor of the integration of markets,

as the economies within regional trading blocks become more closely intertwined. Regional

expansion of distribution networks at both the wholesale and retail levels and service

organizations all serve to reinforce market integration, which can facilitate marketing

standardization (Craig & Douglas, 2000). Besides, cultures of geographically proximate

countries are generally considered similar. Rugman and Verbeke (2004) claim that most of

so-called globalization in fact reflects regionalization, as the vast majority of international

manufacturing and service activity is organized regionally rather than globally, showing

very few of large multinational enterprises that dominate international business have a

genuinely global presence.

Legal environment

Products also have to be modified so as to conform to the legal requirements of overseas markets. According to Leonidou (1996), government rules and regulations are one of the most frequent and influential reasons reported for adapting product strategy abroad.

Cavusgil et al. (1993) discovered that product adaptation was influenced significantly but

negatively by similarity of legal regulations. In fact, a wide range of mandatory changes

might be often required, including modification in package sizes, aesthetics, labeling, and

brand name, in addition to product performance and standard (Baalbaki & Malhotra, 1995;

Hill & Still, 1984; Johnson & Arunthanes, 1995). Local content requirements may specify

that products contain a certain proportion of components manufactured locally (Douglas &

Wind, 1987). Moreover, tariff barriers, such as import taxes, might remain as obstacles to

product standardization, since they possibly affect production costs, make imported goods

more expensive than their local counterparts, and thus favor local production (Ekeledo &

Sivakumar, 1998; Wind & Douglas, 1972). Meanwhile, as Jain (1989) argues, the

52 perspectives of the political environment in a country may result in intervention in the

business affairs of foreign firms as well, which may invalidate product standardization even

in carefully chosen overseas markets. In fact, state officials in many developing countries

may still be the crucial gatekeepers in obtaining a contract (Wind & Douglas, 1972).

Infrastructure/supporting sector

The marketing infrastructure can be regarded as a supporting sector necessary for

the primary activities (e.g., a product’s physical creation or distribution) to take place (Hitt et al., 2003). Support sectors are not directly connected to the production function but may increase the efficiency or effectiveness of the process. Differences in marketing infrastructures between home and host countries, including retailers, wholesalers, transportation, and mass media, possibly have some implications for standardizing marketing mix (Johnson & Arunthanes, 1995). More sophisticated industries are more dependent on advanced infrastructures for success, and similar and favorable infrastructures would make standardization easier for firms. On the other hand, in the absence of certain marketing infrastructures, product may be adapted to local market conditions in order to sell and perform within the infrastructure constraints. Market differences in media availability can constrain opportunities for international campaign standardization. An advertiser must accept the shortage of advertising space and time in some markets as an environment constraint in doing business internationally. It is also likely that the arrival of the Internet and digital media further deepens the gap between countries with different levels of media and telecommunications infrastructures (Chan-Olmsted & Oba, 2004).

Besides, not only domestic infrastructure in each market but also global marketing

infrastructure, which shrinks space between markets, needs to be considered. As Douglas

and Wind (1987) pointed out, improvements in logistic systems have increased capacity to

manage operations on a global scale, facilitating global standardization strategies. The

development of global telecommunication networks, such as satellite television and the

53 Internet, enables firms to roll out campaigns for standardized products on a global basis. It

is also likely that global marketing requires global television networks (Eger, 1987). This point is discussed in detail in the next chapter.

Industry Competition

As the degree of competition in a particular industry possibly influences response by

consumers, only the products that satisfy consumer requirements better can eventually

survive competition (Cavusgil et al., 1993; Porter, 1985; Wind & Douglas, 1972).

According to Sheth (1986), because corporate competition has become global does not

automatically mean that products should be global, too. Rather, the presence of intense

competition would necessitate adaptation for a firm to gain an advantage over rivals by

providing a product that ultimately matches local conditions more precisely and thus to

broaden the local market base. Hence, intense competition in the industry may compel the

firm to engage in extensive product adaptation, whereas, to the contrary, product adaptation

may be unnecessary in less competitive markets (Baalbaki & Malhotra, 1993; Cavusgil et

al., 1993; Jain, 1989). In fact, Boddewyn et al. (1986) found that the level of intensity of

industry competition was the most important variable affecting the degree of standardized

marketing strategy across overseas markets. Likewise, Cavusgil et al. (1993) discovered that

the most important consideration in specific adaptation decision (e.g., packaging and

labeling) was the intensity of competition in the overseas markets.

Meanwhile, the choice of strategy to match competition will also be affected by

whether the firm competes with local rivals or other global rivals. Global firms, on one hand,

may face disadvantages in overseas markets when local firms are well suited to adapt to the

needs of local market (Alashban et al., 2002). It is possible that different competitors in different markets may require substantial modification of the firm’s competitive positioning

in order to compete effectively (Craig & Douglas, 2000). On the other hand, competing

against the same rivals with similar market share in different countries may lead to greater

54 standardization rather than competing against purely local firms (Baalbaki & Malhotra,

1993; Sorenson & Wiechmann, 1975).

A firm also needs to take into account the strengths and weaknesses of its

competitive position in each market. A firm might be able to succeed by leveraging its

domestic positioning in international markets (Craig & Douglas, 2000). Jain (1989) and

Porter (1986) suggest that if the competitive position of a firm does not vary among markets,

a global standardization strategy may be worthwhile. For example, given a firm with a

leadership position in both the United States and overseas markets, the firm can successfully

standardize its marketing strategy in all those markets.

Brand and Country of Origin

Consumers in varying countries may view the same product differently. Differential

attitudes toward the same product among them may in part be caused by differences in

perceptions, that is, different levels of awareness, knowledge, and familiarity

(Parameswaran & Yaprak, 1987). Unfamiliar products are likely to present a challenge and

meet with resistance among consumers in foreign markets, since consumers may not be

willing to take the risk of purchasing products from firms they know less about. Presumably, a familiar product can engender more favorable attitudes and greater acceptance, allowing the firm greater freedom in standardizing product, while a lesser known product may require adaptation in order to enhance consumer reception (Buzzell, 1968; Cavusgil et al.,

1993). If this is the case, branding can help firms overcome or minimize the barrier, offering identity and recognition and eventually allowing more standardization (Whitelock &

Pimblett, 1997). To the contrary, lack of brand awareness possibly requires a firm to adopt a

very different strategy in a country.

A brand is defined by the American Marketing Association (2006) as “a name, term,

sign, symbol, or design, or a combination of them intended to identify the goods and

services of one seller or group of sellers and to differentiate them from those of

55 competition.” Branding is aimed at creating not only high familiarity among consumers but

also positive image for a product among them by adding certain rational, emotional, and

intangible attributes to the product. Actually, brand names, which are defined by Aaker

(1991) as one of the most important assets of a firm, are what consumers rely more heavily

on than price or physical appearance in judging product quality (Dawar and Parker, 1994).

As brand images go beyond mere awareness and deal with the thoughts and meanings of the

brand to a consumer, they can be regarded as the collective set of beliefs and associations

held by consumers for particular brands.

Three types of brand images are functional, social, and sensory images. Roth (1995)

suggests that those images are based on the fulfillment of basic consumer needs: problem

solving and prevention (functional), group membership and affiliation (social and symbolic),

and novelty, variety seeking, and sensory gratification (sensory). Brands with a global

image are often perceived to meet these needs. The appeal of global brands arises from

highly perceived quality and credibility, higher prestige, and the psychological benefits of

perceived brand globalness (Alden et al., 1999; Hsieh, 2002; Schuiling & Kapferer, 2004;

Steenkamp, Batra, & Alden, 2003).19 In fact, consumers might prefer brands with global

image even when quality and value are not objectively superior. They tend to consider that global brands are superior in quality simply because they are accepted globally, and for this reason, many firms have concentrated their efforts on the development of global brands and oftentimes emphasized their worldwide availability and acceptance (Alden et al., 1999;

Keller, 1998). It seems logical that firms with global brands, which are perceived to give higher quality and prestige to consumers, can leverage a high level of product standardization.

19 Global brands are commonly defined as brands that consumers can find under the same name in multiple countries with generally similar or centrally coordinated marketing strategies (Steenkamp et al., 2003; Yip, 1995).

56 Consumers are also sensitive to the country of origin of a product as well as to a

brand, since the product’s country of origin and its associated image and stereotypes play an

important role in formulating their perception and evaluation (Bilkey & Nes, 1982; de

Mooij, 2004; Kotler & Gertner, 2002; Papadopoulos & Heslop, 1993; Phau & Prendergast,

2000). It is, therefore, assumed that consumers who have positive or negative attitudes

toward a particular country show favorable or unfavorable responses to country-related

products. Country of origin is defined by Johansson, Douglas, and Nonaka (1985) as the

country where the corporate headquarters of the firm marketing the product or brand is

located and with which consumers identify the product or brand, although the product may

not necessarily be manufactured in that country. Many of the world’s leading firms are

indeed associated with their specific country of origin, which provides them a crucial part of

their image and of their offering to consumers (Baker & Ballington, 2002; Phau &

Prendergast, 2000). For instance, in spite of their vast global presence and worldwide manufacturing basis, Nike and Coca-Cola might be associated with the United States.

Consumers tend to use country of origin information as an indicator of quality

(Kotler & Gertner, 2002). Accordingly, a country’s image oftentimes operates as a halo

construct to influence consumers’ evaluations of product attributes (Han, 1989; Johansson et

al., 1985). In essence, a country itself can be a brand. Shimp, Samiee, and Madden (1993)

applied the term “country equity,” referring to the emotional value resulting from

consumers’ association of a brand with a country. Consumers are willing to buy products

from industrialized countries as a result of country equity (Agbonifoh & Elimimiam, 1999;

Cordell, 1993). For example, a German or Japanese manufacturer, regardless of the actual

quality of its products, may benefit from the worldwide perception of high quality

associated with German or Japanese products. What is profitable for firms may be a positive

product-country match that occurs when a country (e.g., Germany or Japan) is perceived as

very strong in an area (e.g., technology), which is also an important feature for a product

57 category (e.g., cars) (Bilkey & Nes, 1982; Mooij, 2004; Kleppe, Iversen, & Stensaker,

2002). Unknown brands may be favored only if they are made in high reputation countries,

but quality image for brand can diminish if it is identified with a less prestigious country

(Han & Terpstra, 1988; Johansson & Nebebzahi, 1986; Shimp et al., 1993). From this

perspective, the country of origin could have a greater effect on consumer evaluation than

the brand name. Baker and Ballington (2002) suggest that the product’s country image can

be used vividly in positioning strategies in the presence of an increasing in standardization

of products as a result of globalization.

Overall, both brand and country images influence product perceptions and

evaluations and purchase decisions. It is also noteworthy that just as consumers in varying

countries may view the same product differently, they also perceive brands differently.

There are differences between countries in the meaning invested in brands, and it is likely that consumers consequently hold different brand beliefs (Hsieh, 2002). Likewise, consumers of a certain country may have different attitudes regarding products from a given country than do those of other countries. Countries in which foreign brands and products are widely available and accepted perhaps provide a more favorable context for the introduction of standardized products. Meanwhile, the country of origin effect can be influenced by ethnocentrism, the belief that one’s own group is central and superior (Kotler & Gertner,

2002).

Variations in brand and country of origin effects across countries may in part be due

to culture-specific factors. Hofstede’s work on cross-cultural value systems (2001) identifies

three aspects of culture that can be related to consumer needs and brand images: collectivism/individualism, uncertainty avoidance, and power distance. People of

collectivistic and of high-uncertainty-avoidance cultures are expected to be more royal to

brand than people of individualistic and of low-uncertainty-avoidance cultures (de Mooij,

2004). Meanwhile, Roth (1995) found that in high-power-distance cultures where people are

58 highly motivated by social status and affiliation norms, the effects of social brand image is

great. It is also discovered by Roth (1995) that people in individualism cultures seem to

seek sensory brand images that emphasize variety, novelty, and individual gratification,

whereas cultures with collectivism are amenable to social brand images that reinforce group

membership and affiliation benefits.

As for the country of origin, Gurhan-Canli and Maheswaran (2000) found that in

individualistic cultures, a home country product is evaluated more favorably only when it is

superior to competition, while in collectivistic cultures, a home country product is evaluated

more favorably regardless of its superiority. The inclination to favor home country products

over foreign country products in collective cultures suggests a positive relationship between

collectivism and ethnocentrism (Balabanis, Mueller, & Melewar, 2002).

Firm Characteristics

The implementation of product standardization/adaptation is determined by forces found within the firm itself. Commitment to and emphasis on product standardization/adaptation vary from a firm to another, according to firm’s philosophy and orientation, resources, the relationship between headquarters and subsidiaries, the degree of centralization/decentralization, and the market entry mode (Akaah, 1991; Cavusgil et al.,

1993; Cavusgil & Zou, 1994; Douglas & Craig, 1989; Jain, 1989; Quelch & Hoff, 1986;

Samiee & Roth, 1992; Wind et al., 1973).

Philosophy/orientation

Chandler (1962) defined strategy as “the determination of the basic long-term goals

of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” (p.13). A firm’s international marketing strategy first depends on its overall business orientation (Martenson, 1987; Quelch & Hoff, 1986). For instance, a firm with less ambitious sales goals but a greater emphasis on cost control will be likely to have a policy of a unified product image across markets, offering standardized

59 products, while another firm with ambitious sales and market share goals will be likely to

adopt non-uniform marketing programs (Walters, 1986).

Perlmutter (1969) identified three types of orientations top management has toward

internationalization that reflect the goals and philosophies of the firms with respect to

international operations and hence lead to different management strategies: ethnocentrism

(home country orientation); polycentrism (host country orientation); and geocentrism (a

world orientation).20 According to Perlmutter (1969), the ethnocentric firm projects

domestic policy internationally, viewing overseas operations as secondary to domestic

operation and as a means to dispose of surplus domestic production and commonly

administering overseas marketing through its international division. In the polycentric firm, akin to a confederation of quasi-independent foreign subsidiaries, marketing activities are organized on a country-by-country basis, and home country products are modified to meet local needs (Perlmutter, 1969). Perlmutter (1969) further assumes that the geocentric firm views the entire world as a potential market, ignoring national borders and seeking for uniformity within specific groups on a global basis. Unlike the ethnocentric and polycentric firms, the geocentric approach involves a collaborative effort between headquarters and subsidiaries to establish universal standards and permissible local variations and also encourages communication among subsidiaries.

Meanwhile, Bartlett and Ghoshal (2000) classified firms operating abroad into the

following four types, based on different strategic approaches adopted by them: international, multinational, global, and transnational firms. According to Bartlett and Ghoshal (2000), an international firm, analogous with the ethnocentric firm above, develops products for the domestic market and only subsequently sells them abroad. In contrast, a multinational firm, just as the polycentric firm above, flexibly modifies their products, strategies, and

20 Wind, Douglas, & Perlmutter (1973) later extended this framework to include regiocentric orientation. The regiocentric firm recognizes regional commonalities and leads to the design of regional strategies.

60 management practices country by country, responding to the unique differences and conditions in each country (Bartlett and Ghoshal, 2000). A global firm, which views the

world as a market and produces a product for the global market (Bartlett and Ghoshal,

2000), is equivalent to the geocentric firm described above. Finally, Bartlett and Ghoshal

(2000) suppose that a transnational firm attempts to be more responsive to local needs while

retaining their global efficiency. In contrast to the global firm, the transnational firm

recognizes the importance of flexible and responsive country-level operations. The

transnational firm would be viewed as polycentric at the same time as geocentric.

The classification described above might be somewhat arbitrary, as Bartlett and

Ghoshal (2000) themselves acknowledged. In fact, academicians sometimes use the terms

“international,” “multinational,” “global,” and “transnational” interchangeably. Nonetheless,

a certain typology to sort out firms according to their strategic orientation appears significant, since it certainly sheds light on a different set of management motivations and attitudes, which would eventually be reflected in variant marketing executions among firms.

Many U.S.-based firms have traditionally adopted the international strategy in

Bartlett and Ghoshal’s typology (2000). In fact, it became clear by 1990 that few U.S. firms

had been successful at adopting global strategies (Malhotra, Agarwal, & Baalbaki, 1998).

Despite corporate management’s increased understanding of its overseas markets, foreign

operations were often viewed as appendages whose principal purpose was to leverage the

resources and capabilities developed in the home market. In this approach, foreign

subsidiaries are freer to adapt products to reflect market differences than in the global

approach typically taken by Japanese firms, but their dependence in the parent firm for new

products, process, and ideas dictate a great deal more coordination and control by

headquarters than in the multinational approach typically employed by European firms

(Bartlett & Ghoshal, 2000).

61 Resource

The resource-based view (RBV) (e.g., Barney, 1991; Grant, 1991) suggests that a

firm can obtain sustainable competitive advantage by leveraging its unique resources. The

basic idea of the RBV is that a firm’s strategy can be conceptualized and implemented by

specifying a unique resource profile for the firm (Wernerfelt, 1984). At the business strategy

level, resources refer to inputs that can be used to implement its strategies that improve its

efficiency and effectiveness (Barney, 1991). Examples of the resources cover a wide range:

capital, brand names, in-house knowledge of technology, employment of skilled personnel,

trade contracts, patents, machinery, efficient procedures, to mention a few (Grant, 1991; Hit

et al., 2003; Wernerfelt, 1984).

Firm’s international business involvement is marked by increasing resource

commitment (Leonidou, 1996). Specifically, the relevant resources of a firm in international

marketing include size advantages, international experiences, extent of international

business involvement, and resources available for international development (Cavusgil &

Zou, 1994). Size of firm might have influence on the degree of standardization/adaptation, as larger firms are more likely to have adequate resources to investigate overseas markets and to find it economical to adopt adaptation approach (Wind et al., 1973). Likewise,

Walters (1986) assumes that a firm with extensive financial and managerial resources will place more emphasis on adaptation strategies.

An integrated set of resources is transformed into capabilities, the source to perform

some activity, through dynamic and interactive processes (Amit & Shoemaker, 1993; Collis

& Montgomery, 1995; Grant, 1991). In essence, resources are what a firm has, while

capabilities are what a firm can do. Resources and capabilities determine core competencies,

or strengths of its positions, which serve as the basis for sustainable competitive advantage

for a firm over its rivals only when rivals cannot understand, purchase, imitate, or substitute

62 for those resources.21 A firm uses different core competencies in efforts to produce products that can satisfy consumers’ needs (Prahalad and Hamel, 1990).

In order to achieve sustainable competitive advantage on a global scale, a firm has to develop a complex matching of the firm’s utilization and deployment of resources and the configuration of its operations with the spatial distribution of markets (Craig & Douglas,

2000; Dunning, 1998). The firm’s financial and managerial resources are configured through an intra-firm network, in which they link headquarters with foreign subsidiaries for making value chains at the global level (Anderson & Forsgren, 2000; Bartlett & Ghosal,

1991; Craig & Douglas, 2000; Porter, 1986, 1990).

Porter (1986) claims that one of the key roles of marketing is to coordinate the transfer and application of business experience to new markets. Consider the transfer of skills for example. Marketing skills in dealing with a specific type of market environment can be transferred to support the firm’s operation in another market. Establishment of such mechanism to transfer skills or learning across diverse markets can provide a firm with a competitive advantage stemming from utilization of a broad and rich base of experiences, ideas, and know-how (Craig & Douglas, 2000). This mechanism can facilitate sharing of best practices among managers in different markets throughout the globe. It is a process of organizational learning directing attention toward strategies that have been successful in the past and away from those that have failed (Buckley & Brooke, 1992).

21 It is noteworthy that, despite of its insightful focus on the firms, the RBV also has to incorporate the external context within which different resources would be most productive. The value of resources can be determined not only by their characteristics but also by market forces. For example, unanticipated changes in the economic structure of an industry may make what was a source of sustainable competitive advantage at one time obsolete and no longer valuable for a firm (Barney, 1991). The RBV, therefore, has to link a firm’s internal capabilities (what it does with a set of resources) and its external industry environment (what the market demands and what competitors offer) (Collis & Montgomery, 1995). A firm perhaps competes well in the context in which there is a fit between the firm’s resources and external opportunities.

63 Douglas and Craig (1989) and Rau and Preble (1987) argue that strategy formation

in international markets is an evolutionary process. In the first phase, the firm’s key strength

is likely to lie in its existing, domestic product line, and attention should be focused on acquiring experience in marketing that line overseas; emphasis then should shift to new product development geared to overseas market needs; and once experience in both marketing and new product development for international markets has been acquired, the more complex issue of strategy integration and coordination across markets should be addressed. According to Cavsugil et al.’s empirical study (1993), a firm that has accumulated more experience in international business has a greater appreciation of the differences between markets and, along with management’s better understanding of the market idiosyncracies, is more likely to pursue discretionary product adaptation.

Degree of centralization/decentralization

The headquarters-subsidiaries relationship can be a factor that influences marketing

standardization/adaptation. Standardization would be accomplished effectively through a

tight linkage of subsidiaries with the headquarters, which hold centralized authorities. The

pressure to standardize products perhaps increases when central management at the

headquarter level, which may not take account of local differences, believes that it has

identified a superior marketing idea and what works in one market should work in another,

and, as a result, the subsidiaries have relatively little autonomy (Douglas & Wind, 1987;

Jian, 1986; Kanso, 1992; Quelch & Hoff, 1986; Samiee, Jeong, Pae, & Tai, 2003; Solberg,

2000; Walters, 1986). It should be noted that a global standardization view at headquarters

is not always representative or even an accurate reflection of what occurs at the local

subsidiary level (Jain, 1989; Kanso, 1992; Samiee et al., 2003), and, due to their different

point of view, conflicts may arise between both sides.

To the contrary, strong national subsidiary management might be required to sense

and represent the changing needs of local consumers and the pressures from host

64 governments (Bartlett & Ghoshal, 2000). If subsidiaries have strong positions in a firm, then

it is much more likely that decision-making is decentralized and delegated to the subsidiaries. Emphasis on local management autonomy stems from the advantages traditionally associated with decentralization and a concern with encouraging local entrepreneurship (Douglas & Wind, 1987). In these circumstances, each representative of local subsidiaries most likely develops his or her own market strategies independently of the corporate headquarters (Solberg, 2000).

Market entry mode

It is possible that the strength of linkage between headquarters and subsidiaries or

affiliates is greatly affected by the choice of entry mode for a foreign market, such as

wholly-owned subsidiaries, joint ventures, licensing agreements, and exports. Hitt et al.

(2003) suggest that a firm’s entry mode decision is likely to be influenced by the industry’s

competitive conditions; the firm’s unique set of resources, capabilities, and core

competencies; and the country’s situation and government policies. The decision on how to

enter a market will also be likely to depend on such factors as speed, i.e., how quickly does

the firm want to get into the market?; costs, i.e., how much is it going to cost to enter the

market by each method?; flexibility, i.e., how much flexibility does the firm want to retain?;

or risk factors, i.e., what is the competitive or political risk of entering now? (Terpstra &

Sarathy, 2000).

Mode of entry, even though not being strictly a marketing variable, determines not

only the commitment of resources and hence risk exposure in overseas markets but also the

degree of control the headquarters can exercise over operations and strategies and the

flexibility to adjust to differences in market conditions (Douglas & Craig, 1989; Rau &

Preble, 1987). Higher operational control results from having a new wholly-owned subsidiary in the foreign venture, i.e., a greenfield venture. While control is desirable to improve firm’s competitive position and maximize the returns on its resources,

65 wholly-owned subsidiaries are the most risky forms of overseas involvement because of the

volatility of worldwide economic, social, and politic conditions (Agarwal & Ramaswami,

1992; Kim & Hwang, 1992).

To the contrary, exporting is the most common approach employed by firms taking

first international steps, because it can be executed without committing any great amount of

human or financial resources, and hence the risks of financial loss can be minimized.

Licensing is a contractual agreement in which a firm grants access to its intangible assets

such as patents, know-how, trademarks, and company name to foreign firms in return for

royalties or other forms of payment. The advantages of licensing are apparent when capital

is scarce, import restrictions forbid other means of entry, or a country is sensitive to foreign

ownership, although the license mode provides less control to the licensing firm.

A joint venture is a partnership of two or more participating firms that have joined forces to create a separate business entity, which is designed to take advantage of the strong functions of the partners and supplement their weak functions. Joint ventures can be attractive to international marketers when firms are unfamiliar with legal and cultural barriers in overseas markets. If greater adaptability and control are more important for firms representing countries with a high cultural difference, equity-based joint ventures are the recommended mode of entry (Agarwal, 1994). They also enable a firm to utilize the specialized skills of a local partner and to access a partner’s local distribution system. The

extent of control in joint ventures lie between that of greenfield ventures and licensing

agreements. Walter (1989) claims that a firm with significant joint-venture operations places

more emphasis on adaptation strategies. To the contrary, if a firm’s foreign operation is fully

owned rather than a joint venture, the firm is more likely to use a high level of

standardization (Rau & Preble, 1987).

Figure 2-1 illustrates how determining factors, which have been discussed thus far,

could exert effects upon a product on the continuum between standardization and adaptation.

66 Each factor is presented in terms of what conditions favor product standardization versus adaptation.

Table 2-1. Determinants of the degree of product standardization/adaptation. Factor Study Method Finding/conclusion Product Boddewyn & Empirical - Industrial goods marketers were the characteristics Hansen (1977) furthest advanced on the way to achieving complete standardization. Consumer durable firms achieved a greater degree of standardization than those for consumer nondurables. Hill & Still Empirical - Consumer nondurables were (1984) extremely sensitive to cultural differences. Huszagh et al. Empirical - Products perceived as having no (1985) substitutes or being essential were standardized. Quelch & Hoff Descriptive - Products that are highly (1986) culture-bound do not enjoy high-scale economies or efficiencies and are more difficult to market globally. Samiee & Roth Empirical - Firms producing industrial products (1992) emphasized global standardization more than consumer goods firms. Baalbaki & Descriptive - Industrial products are more suitable Malhotra (1993) for standardization than are consumer products. Consumer nondurables require greater adaptation than consumer durables. Culture bound products require greater adaptation than culture free products. Cavusgil et al. Empirical - As cultural specificity of products (1993) increases, the degree of product adaptation increases. Target market Levitt (1983) Descriptive - Success in a world with segment homogenized demand requires a search for sales opportunities in similar segments across the globe. Sheth (1986) Descriptive - There is always a segment of a market ready to buy foreign product without extensive changes. The size of the segment determines success in the foreign market. Douglas & Wind Descriptive - The existence of a potential global (1987) segment is a key motivating factor for developing a global product strategy.

67 Table 2-1. Continued Factor Study Method Finding/conclusion Hassan & Descriptive - The existence of global consumer Katsanis (1991) segments that are measurable and reachable must be considered as a prerequisite for successful execution of any global marketing strategy. Wang (1996) Descriptive - The degree of standardization is contingent upon the commonality of the cross-national consumer segment on the basis of demographic and psychographic variables. Country’s Buzzell (1968) Descriptive - There are many examples of cultural cultural differences that have affected characteristics marketing success or failure. Wind & Douglas Descriptive - Each country is characterized by (1972) specific environmental conditions, such as certain cultural and social patterns, which affect buying patterns and response. Boddewyn & Empirical - Differences based on culture (i.e., Hansen (1977) language, habits, tastes, way of life, personal priorities, beliefs, etc) remain as obstacles to achieving a full standardization of marketing strategies. Walters (1986) Descriptive - Insofar as market heterogeneity at the cultural levels is seen to be either small or on the decline, standardization becomes more attractive and feasible. Jain (1989) Descriptive - The greater the similarity in the markets in terms of consumer behavior and lifestyle and the higher the cultural compatibility of the product across the host countries, the greater the degree of standardization. Wang (1996) Descriptive - The degree of standardization is contingent upon the similarities or the psychic distance of the countries and country clusters. Country’s Keegan (1969) Descriptive - There are many products that have environmental been adjusted to perform the same characteristics function internationally under different environmental conditions. Jain (1989) Descriptive - The greater the difference in physical and legal environments between home and host countries, the lower the degree of standardization.

68 Table 2-1. Continued Factor Study Method Finding/conclusion Economic Wind & Douglas Descriptive - Each country is characterized by condition (1972) specific environmental conditions, such as level of economic and technological development, which affect buying patterns and response. Hill & Still Empirical - The degree of change introduced in (1984) consumer goods depends on economic differences between home country markets and less-developed countries. Jain (1989) Descriptive - Standardization is more practical in markets that are economically alike. Physical/ Buzzell (1968) Descriptive - The physical environment (climate, geographic topology, and resources) has an condition obvious effect on the sales potential for many products. Wind & Douglas Descriptive - Unique national legal characteristics (1972) place certain constraints on marketing policies, necessitating a different approach or adaptation to different market conditions. Boddewyn & Empirical - National government regulations and Hansen (1977) restrictions remained as obstacles to achieving full standardization. Hill & Still Empirical - Changes were made first to product (1984) features not conforming to the legal and economic requirements of the local market. Cavusgil et al. Empirical - As similarity of legal regulations (1993) increased, the degree of the various aspects of product adaptation decreased. Baalbaki & Empirical - Across-market differences in laws Malhotra (1995) related to product standards, features, performance, and safety necessitated a higher level of strategy adaptation. Johnson & Empirical - Differences in government regulation Arunthanes between the domestic and export (1995) markets positively affected product adaptation. Infrastructure/ Douglas & Wind Descriptive - The effectiveness of global supporting (1987) standardization depends to a large sector degree on the availability of an international infrastructure of communications and distribution. Johnson & Empirical - Infrastructure differences resulted in Arunthanes greater adaptation for consumer (1995) products than for industrial products

69 Table 2-1. Continued Factor Study Method Finding/conclusion Industry Boddewyn et al. Empirical - Firms perceive competition as the competition (1986) most important obstacle in standardizing marketing mix. Jain (1989) Descriptive - The greater the degree of similarity in a firm’s competitive position in different markets, the higher the degree of standardization. Competing against the same rivals, with similar share positions, in different countries leads to greater standardization than competing against purely local companies. Baalbaki & Descriptive - The stronger the competition, Malhotra (1993) particularly local competition, the greater the need to adapt the product offering. Cavusgil et al. Empirical - As market competitiveness (1993) increased, the degree of product adaptation increased. Brand and Buzzell (1968) Descriptive - Lack of brand awareness, coupled country of with suspicion of the quality of origin American products, requires the firm to adopt a different marketing strategy abroad. Hill & Still Empirical - Creating brand names is the first step (1984) in standardizing products across markets. Baalbaki & Descriptive - Since attitudes toward the product’s Malhotra (1993) country of origin influence the consumers’ perceptions and evaluations, variations in such perceptions between markets call for a greater strategy adaptation. Cavusgil et al. Empirical - As product familiarity of consumers (1993) increases, the degree of product adaptation decreases. Firm Wind et al. (1973) Descriptive - The degree of internationalization to characteristics which management is committed affects the specific international strategies and decision rules of a firm.

70 Table 2-1. Continued Factor Study Method Finding/conclusion Quelch & Hoff Descriptive - A company’s approach to global (1986) marketing depends on its overall business strategy. When headquarters believes it has identified a superior marketing idea, the pressure to standardize increases, while large markets with strong local managements are less willing to accept global programs. Walters (1986) Descriptive - A firm with ambitious sales and market share goals, operations in many foreign markets, extensive financial and managerial resources, a global production network, and significant joint-venture operations are very likely to adopt non-uniform international marketing programs. Douglas & Craig Descriptive - The decision with regard to the mode (1989) of operation determines the degree of control exercised over operations and strategy in overseas markets and the flexibility to adjust to changes in market conditions. Jain (1989) Descriptive - The greater the strategic consensus among parent-subsidiary managers on key standardization issues and the greater the centralization of authority for setting policies and allocating resources, the more effective the implementation of standardization strategy. Akaah (1991) Empirical - Firms were inclined to utilize strategy standardization if they enjoyed ownership interest in host country operation and had geocentric/regiocentric orientation rather than ethnocentric/polycentric orientation. Samiee & Roth Empirical - The ability of firms to pursue global (1992) standardization may hinge on their international business philosophies and organizational structures. Cavusgil et al. Empirical - As a firm’s international experience (1993) increased, the degree of product adaptation increased.

71 Table 2-1. Continued Factor Study Method Finding/Conclusion Cavusgil & Zou Empirical - A high degree of product adaptation (1994) should be sought when a firm has substantial international competence.

Product characteristics Product characteristics · Industrial goods · Consumer goods · Essential products with (Particularly, Standardization Adaptation no substitutes non-durables) · Culture-bound · Products with universal appeal products

Target market segment Target market segment · Global consumer · Country-specific Standardization Adaptation segments across consumer segments

countries

Country’s cultural Country’s cultural characteristics characteristics Standardization Adaptation · Culturally similar · Culturally different countries countries Country’s environmental Country’s environmental characteristics characteristics · Economically similar · Economically different

countries countries · Similar physical · Different physical conditions conditions · Geographically · Geographically remote proximate markets Standardization Adaptation markets · Fewer and similar legal · More and different requirements and legal requirements and government rules government rules · Similar marketing · Different marketing

infrastructures infrastructures · Global infrastructures · Global infrastructures available unavailable Industry competition Industry competition · Less intensive · More intensive competition competition · Rivals are global firms Standardization Adaptation · Rivals are local firms · Same competitive · Different competitive position across markets position across markets

Figure 2-1. Direction of product standardization/adaptation and determinants.

72 Brand and country of Brand and country of origin origin · Well-identified and · Little-identified and recognized global brand Standardization Adaptation recognized global brand · Country of origin · Country of origin associated with high associated with low quality quality

Firm characteristics Firm characteristics

· Geocentrism (global · Polycentrism approach) (multinational approach) · Greater emphasis on · More ambitious sales cost control goal · Fewer resources (size, Standardization Adaptation · More resources (size, capital, network, capital, network, experience, knowledge experience, knowledge etc.) etc.) · Centralized institution · Decentralized

and decision-making institution and · Greenfield venture decision-making · Joint venture/licensing

Figure 2-1. Continued

73 CHAPTER 3 APPLICATION OF INTERNATIONAL MARKETING THEORIES Standardization/Adaptation of Television Programming

Theoretical foundations in international marketing studies were reviewed in the previous chapter to establish an analytical framework for the programming strategy of global television networks. On the basis of previous research works in media economics, management, and globalization disciplines, this chapter discusses how factors, which are considered in the international marketing literature to possibly influence the decision on product strategy, could be applicable to the context of television programming products.

In the context of this study, the global standardization of television programming refers to the marketing of a programming product aired in its original format and identical in various markets of the world, based on the “one size fits all” approach. In particular, the globally standardized programming of U.S. originated-cable networks is basically produced in the United States, distributed by the networks to their affiliates around the world, and offered by local channels owned and operated by the affiliates. The desirability of programming standardization for U.S.-originated cable networks can be explicated from microeconomic perspective. As Waterman (1988, p.142) notes, “The larger the potential audience base which a producer can reach, the greater the amount of economic resources the producer can profitably invest in a program designed for that audience.” Thus, producers whose programming products are distributed to a number of markets have an incentive to produce relatively high budget programs (Hoskins & McFadyen, 1991; Waterman, 1988;

Wildman & Siwek, 1988). In essence, the potential size of market eventually determines production budgets and hence the quality and intrinsic audience appeal of television programming, which usually increases by spending much expenditure for the creative inputs of production.22

22 A larger budget makes it possible for a producer to acquire more of the inputs, for example, to hire better writers, directors, and camera crews; to shoot from more camera

74 Nonetheless, full standardization might oftentimes be an unrealistic approach for

global television networks. In the similar way that fashion designers often make smaller or

larger sizes to fit a foreigner’s figure, the networks may have to adapt programming for

various local needs. For instance, language difference is the most common obstacle to full

standardization. Unless all viewers in overseas markets have a lingua franca, full

standardization of programming is difficult on a global scale. Suppose that U.S.-originated

cable networks offer programs in English language without any language customization for

non-English speaking markets of Asia. Yet, a population of English-speaking viewers in

these markets is not so large relative to the entire population of Asia.23 Then, to reach a

wider range of audiences, U.S.-originated cable networks have to subtitle or dub their programming into local languages in the markets. Indeed, many global television networks transmit programming via multiple feeds so that distributors in each country can pick it up, select the adequate set of subtitles or dubbing, and retransmit it to subscribers in their country. Such language customization is presumably the simplest but most prevalent way to local adaptation, similar to packaging and labeling modification necessary for general consumer goods.

Determinants of the Degree of Programming Standardization/Adaptation

Product Characteristics

The feasibility of standardized or adapted programming is greatly influenced by

other factors than language. First, the economies of scale arising from product

standardization for television programming are great, and for this reason, Doyle (2002)

claims that television programs are well suited to wide international distribution. As a

consequence of a television program being a public good whose cost is independent of the angles and do more editing; to use more sophisticated special effects; to hire actors with greater name recognition and presumably the ability to deliver bigger audience; and so on (Owen & Wildman, 1992). Those inputs usually increase a program’s appeal to viewers. 23 It was estimated in 1995 that there were only about 70 million fluent English speakers in Asia (McGrath, 1995).

75 number of persons who actually consume it, the program can be distributed to additional

markets at minimal incremental cost, in spite of the high fixed costs initially necessary for

its production (Hoskins et al., 1997; Owen & Wildman, 1992; Wildman & Siwek, 1988).

Roughly speaking, a program shown in just one country could cost almost as the same as a

program distributed globally, aside from negligible marginal costs required for copy or

transmission. However, if programming is developed and produced by every local channel,

global television networks can hardly sustain scale economies on a global scale. It possibly

costs much more for a network to produce separate programs for each individual foreign

market than to produce a single program for worldwide distribution (Owen & Wildman,

1992).

To be sure, it is uncertain whether or not the profit accruing from standardized

programming is enormous, because, as discussed earlier in the relationship between product

standardization and financial performance, profitability depends not only costs but also

sales. It is, nonetheless, true that production costs are a major area to generate cost savings

for television programming, since the proportion of programming expense that goes toward production costs is generally large. From this perspective, global television networks might operate as business entities faced with cost forces that make global standardization attractive. If the initial costs are recouped, the revenue generated from the additional markets is largely profit, and hence media firms could obtain substantial financial returns from distributing their products to the largest number of audiences in as many markets as

possible. Major U.S.-originated cable networks with a number of foreign affiliates are

clearly in the best position to utilize their programming products across different geographic

markets. According to Chan-Olmsted (2006), the fact that an existing product may be

76 redistributed to and reused in different outlets, via a windowing process,24 reinforces the

advantage of diversifying into multiple related distribution sectors in various geographical markets to increase the product’s revenue potential.

For these reasons, foreign markets have been traditionally considered as ancillary

but important markets to the producer’s home market in the international flow of television

programming. According to Owen and Wildman (1992), U.S. television programs are

released in foreign markets in a series of windows that parallels the release sequence in the

United States. Meanwhile, it has increasingly become common that U.S. television

producers take into consideration a program’s global appeal and potential for success in

foreign markets at the development stage of programming (Noam, 1993), in a similar way

that motion picture producers in Hollywood oftentimes attempt to build their own global

audience, offering theatrical films with universal appeal (Croteau & Hoynes, 2001).

According to Hoskins and Mires (1988), the Hollywood producers and television networks

become sensitive to what the American viewers like, while being aware of what the foreign

viewers dislike. This perspective can be regarded as the core principle of global television

networks with standardized programming, which is targeted to worldwide audiences.

Morley and Robins (1995, p.15) articulated about a decade ago, “Satellite and cable

channels are also making headway in marketing standardized product worldwide.”

Meanwhile, media content, often referred to as cultural product, is similar to

consumer non-durables, whose appeal varies by national taste (Shrikhande, 2001). As television viewers feel that it is difficult to identify with the styles, values, beliefs, institutions, and behavioral patterns of foreign programming, a particular program rooted in

one culture and thus attractive in that environment may diminish in appeal when exported,

being subject to the “cultural discount,” i.e., the reduction in value of a program (Hoskins et

24 Television producers try to maximize the exploitation of their programming assets by showing them through different windows (e.g., pay-per-view channel, video and DVD, premium channel, basic cable channel, over-the-air channel, etc.).

77 al., 1997; Hoskins & McFayden, 1991; Hoskins & Mirus, 1988). To overcome cultural

barriers, television programs might need to be revised in the process that entails more than

translation but less than complete reshooting (Wentz, 1997). In light of this product nature,

therefore, it may be plausible that many U.S.-originated cable networks adjust their

programming strategies from showing standardized programs in all markets to engaging in

some form of local programming to suit each market’s tastes and needs.

Nonetheless, it should be noted that Hoskins and McFayden (1991) and Hoskins et

al. (1997) also claim the level of cultural discount being actually less for U.S. programs

offered in foreign markets relative to programs from other countries, since the former often

have more universally appealing content. HBO believes the universal appeal of their

products attractive to most viewers, while recognizing that cultural differences do exit

between markets (Murrell, 1997). Then, HBO looks at the similarities in the way people respond to made-in Hollywood entertainment across all of their markets rather than to localize content.

Previous research on U.S. theatrical films in foreign markets demonstrated that

genre affected a film’s performance in different countries (Craig et al., 2005). This may also

hold true for television programs as well, since the cultural sensitivity of each program

could vary depending on program types and genres. The difference in cultural sensitivity

among genres may have a significant impact on programming strategies by U.S.-originated

cable networks in overseas markets, as they usually feature a specific program type, such as

CNNI’s news programming, MTV’s music programming,25 and ESPN’s sports

programming, targeted at specific audience rather than mass audience. Being less dependent

on language and specific cultural traditions, such program types as popular music,

25 In recent years, the U.S. MTV has increasingly been putting more emphasis on non-music programming, including fashion, humor, drama, game shows, animation, wrestling, and advice to the lovelorn (Gundersen, 2001). Yet, MTV in other markets still relies on music material heavily. 90% of the programming in Asia was fundamentally about music, and 10% was about lifestyle in 2001 (Billboard, 2001).

78 animation, international news, wildlife documentaries, and major sporting events might be

relatively easily understood in different cultural context (Chan, 1994; Mifflin, 1995;

Negrine & Papathanassopoulos, 1990; Oba, 2004; Thussu, 2000). Besides, programming

featuring action and adventure or sexually explicit presentations could travel well, because

they have limited dialogue and simple plots (Croteau & Hoynes, 2001; Straubhaar, 2003). In contrast, it is expected that situation comedies and dramas would not always be understood well across cultural boundaries. As for sitcoms, what considered funny in a culture might not be funny in another culture. Indeed, both U.S. programming sellers and foreign buyers have traditionally been skeptical about the U.S. comedies in different markets (Dupagne,

1992).

Target Market Segment

Chan-Olmsted & Albarran (1998) argue that the rise of information-based attitude

groups that share similar consumption patterns around the world provides incentives for globalization of media firms and media content. As discussed in the previous chapter, one of the advantages of targeting a global market segment is that while the segment in a

single-country market might be small, even a narrow segment can be served profitably if it

exists in several countries. It is likely that a strategic decision of global television networks

to pursue standardized programming would be in large part dependent on whether or not

intermarket audience segments across countries exist and the size of the segments.

Global television networks might attempt to cater to the preferences of multiple

audiences with the same content. The case of STAR TV provides a good lens through which

to view the feasibility of such content. Based in Hong Kong, STAR TV launched its

advertising-supported, satellite programming services in October 1991, covering a potential

audience of 2.7 billion living in 38 countries from Egypt to Japan and from Indonesia to

Siberia. With the exception of a Chinese channel, other four channels mainly carried

English-language programs basically without translation. Although it could reach roughly

79 half of the world’s population, STAR TV initially aimed to attract only the top 5% of this enormous audience: the well-educated, the well-traveled, the wealthy, the professional, and the English-speaking, which emerged with the fast economic growth in Asia since the late

1980s (Chan, 1994; Tanzer, 1991). Richard Li, deputy chairman of HutchVision, which owned STAR TV, said, “There is a strong commonality among these consumers in terms of lifestyle, tastes, and thirst for international information” (Tanzer, 1991). While this Asian elite segment may be small as a proportion of the population, it was expected that the sheer size of the base population would make it huge in absolute numbers, thus creating a lucrative market for STAR TV (Chan, 1994).

Yet, it did not take long for STAR TV to realize that the elite segment was not large enough to sustain the costs of operation, let alone turn a profit (Curtin, 2005). Practically, many advertisers and agencies were suspicious of the target viewers’ acceptance of STAR

TV and hence hesitate to support it (Dhar, 1994; Geddes, 1994; Ha, 1997). Critics viewed

STAR TV’s pan-Asian approach by beaming a one-size-fit-all set of English programming as badly flawed (Engardio, 1994). In 1994, STAR TV divided the services into the northern and the southern arenas, for Greater China as the main target in the former and India as the main target in the latter, offering more culturally specific programming in local languages.

In short, STAR TV had to segment the channel appeal, though roughly, according to culture, ethnicity, and tastes.

Global television networks usually target subgroups of viewers who are assumed to share specific interests across borders. STAR TV initially targeted upscale Asian viewers or

Asians who belonged to the global elite lifestyle segment. Such segment would certainly exist and probably show similar consumption patterns, welcomed by some global brands, such as Visa Card or Rolex. Nonetheless, as noted above, after the initial trial to establish a pan-Asian programming service faltered, STAR TV abandoned to offer programming with little local adaptation and drastically changed their programming strategies to cater to local

80 preferences in the mid 1990s. Whether or not intermarket audience segments emerge today for the standardized programming of a global television network is still open to discussion.

Country’s Cultural Characteristics

It has been discussed thus far that differences between national cultures could

significantly influence product strategies, in particular for consumer products including

media content products. In terms of the role of culture as a significant factor to determine

the acceptance of television programming, Kottak (1990), who researched the Brazilian

television market, observed that the first requirement common to all mass culture success,

no matter what the country, is that they must be pre-adopted to their culture by virtue of

cultural appropriateness and fit the existing culture.

Cultural similarity among markets may provide a favorable context for the

introduction of culturally sensitive products. Television audiences in many countries clearly

express preferences both for national production and, to a lesser degree, for intra-regional

imports, seeking great “cultural proximity” (Straubhaar, 1991, 2003). Cultural proximity

can be defined as a characteristic that is predominantly reflected in nationally or locally

produced material that is closer to and more reinforcing of traditional identities, according

to Straubhaar’s influential work (1991), which has often been cited by follow-on research.

This theory leads to a proposition that the greater the cultural distance between the home

country of a global television network and host countries is, the less likely standardized

programming produced by the network is accepted.

Cultural proximity theory is based to a larger degree on language, which is defined

as the most clearly recognizable part of culture by Hofstede (2001) and as a potential

common base for sharing cultural products, including television programs. However, given

the present practice whereby a majority of imported programs are subtitled with or dubbed

into languages of host countries, it is unclear to what extent the language originally spoken

in the programming matters to audiences. In regard to this point, Wildman (1995) argues

81 that viewers prefer television programs produced in their native language due to something of the essence of an artistic work always lost in translation.

The question now arises: if language is so crucial, why do many programs made in specific languages actually become popular in markets where those languages are not publicly used? The most commonly cited example illustrating this point is Brazilian

“telenovelas,” serialized melodoramas, which are very popular among the Spanish-speaking populations of Latin America. Likewise, Japanese television programs, such as variety shows or dramas, have been widely accepted in East and Southeast Asian countries, such as

Taiwan, Hong Kong, or Singapore, where official languages are not Japanese. Indeed, in terms of the origins of programs frequently watched by Taiwanese viewers, Japanese programs (20.7%) were ranked second behind Taiwanese programs (56.2%) and much higher than those from Mainland China (3.5%), which are produced in Mandarin Chinese and hence are watched by most Taiwanese people without subtitles or dubbing (Su & Chen,

2000). It might be true that the language factor alone cannot indicate the degree to which viewers of host countries accept an imported program.

Straubhaar (1997, 2003) also suggests other levels of cultural proximity than language, based on such elements as shared identity, dress, gestures and non-verbal communication, definitions of humor, ideas about story pacing, living patterns, religious elements, etc. For example, in terms of the popularity of the Brazilian telenovela throughout most Latin American countries, Straubhaar (2003) claims that although Brazilians speak

Portuguese, they have a great deal in common with Spanish-speaking Latin Americans in terms of underlying culture inherited from the Iberia Peninsula and further developed and hybridized with other cultures in Latin America. A Brazilian program, therefore, probably looks far more familiar to a Venezuelan than a program from the United States. Cultural proximity is also cited as a justification for the popularity of Japanese television programs

82 among Taiwanese viewers by a body of studies (e.g. Ishii, Su, & Watanabe, 1999; Iwabuchi,

2001; Liu & Chen, 2003; Oba, 2005; Su & Chen, 2000).

Audiences are supposed to process and interpret media message actively on the basis

of their cultural values. Religious and social mores, for example, might make Asia a tricky market for the free movement of programming across borders by U.S.-originated cable networks. This can be indicated by the complete failure of an American nighttime soap opera “Dallas” in Japan.26 Tracey (1988) viewed as a main cause of the failure that the

suspense in Dallas, which arose from greed, self-interest, lying, and manipulation, might be

considered objectionable and shameful in the Japanese culture that prizes royalty,

self-sacrifice, and honoring one’s obligation. Then, the flop of the show in Japan might be

in part attributed to the gap of basic values between American and Japanese societies.

Moreover, although it was suggested earlier that programming featuring action and

adventure or sexually explicit presentations could transcend nationality relatively easily,

attitudes toward violence and sex are in fact one of most talked-about differences between

Asia and American cultures (Edmunds, 1994). Weber (2003) assumes that violence and sex

would run counter to traditional family values and the spiritual civilization program as the

definer of morals and ethics in China.

U.S. programmers could possibly face some problems caused by cultural differences

between the United States and Asia. According to Hofstede’s multidimensional cultural

index scores (2001), which has been employed as one of the major frameworks for

understanding culture, Asian cultures are commonly characterized by high power distance,

collectivisim, and long-term orientation, relative to American cultures, which are

characterized by low power distance, individualism, and short-term orientation. Some Asian

26 The show, aired weekly on prime time in 1981 by a Japanese commercial broadcast network, had an average rating of only 4.8 percent, far short of the 15 percent needed for a respectable showing, and lasted only six months (Cooper-Chen, 1995; Liebes & Katz, 1990).

83 countries are also feminine and high-uncertainty-avoidance societies in contrast to the

United States. Another cultural distinction is found in that Asian countries are high-context

cultures in comparison to the United States that is a low-context culture (Hall, 1976).27

Insofar as U.S.-made television programs reflect U.S. values, they could be more

successful in countries in which national cultural values are similar to those of the United

States and, to the contrary, less successful in countries in which national cultural values are

different from those in the United States. According to the theory of cultural proximity,

U.S.-made television programming is more likely to be understood and accepted in

English-speaking countries, U.S. territories and ex-colonies, and member countries of

British Commonwealth of Nations.

Country’s Environmental Characteristics

Economic condition

It was assumed in the previous chapter that product standardization might be more

feasible among countries that are economically alike. This is because it would be physically

impossible for many consumers in less developed countries to purchase products that

consumers in developed countries consider essential. Yet, it seems still inconclusive whether

or not people in economically similar countries are also similar in product choice and

consumption behavior.

27 According to Edward Hall’s high/low-context typology of culture (1976), much of communication’s information resides in the context of the communication or is internalized in the person in high-context cultures, as opposed to the explicitly spoken or written words toward which low-context cultures demonstrate high value and positive attitudes. In high-context cultures, who says it and when, how, and where it is said can be more important than what is said, and hence accurate communication can depend as much on long-standing personal relationships or other contextual factors (Money, Gilly, & Graham, 1998). Hofstede (2001) suggests that Hall’s high-/low-context typology corresponds closely to the individualism/collectivism dimension of culture. Low-context communication is typical of individualist society, while high-context communication fits the collectivist society.

84 It might be rather necessary here to argue what impact the economic condition of a

country has on the television programming industry of the country. In fact, economic

development in a country oftentimes boosts the growth of the domestic television

production industry, since the country becomes able to spend relatively large proportions of

its national income on television production (Waterman & Rogers, 1994). When local economies are not yet large enough to finance local production, foreign programs, notably

U.S. programs, are likely to rush in, and networks or stations acquire inexpensive imports to

fill their programming schedules. Even with the expansion of the domestic television

industry, demand is likely to outstrip the supply of programming for a while. When some

U.S.-originated cable networks announced the expansion of their services in Asia in the

early 1990s, the region was viewed as a marketplace that was starved for television

programming and wanted even all-U.S. programming (Amdur, 1994; Kraar, 1994; Landler,

Barnathan, Smith, & Edmondson, 1994; Tanzer, 1991). In the long run, however, the

growing economy would lead to the development of domestic commercial television

infrastructures and benefit original production relatively more than they benefit the U.S. and

other imported programming (Waterman, 1988).

Actually, as the Japanese broadcasting industry, launched in 1953, grew to increase the domestic production in the mid 1960s, imported programs, which were mainly from the

United States, decreased. The main reason for these changes can probably be attributed to the development of domestic television infrastructures and commercial sources, which economically benefited Japan’s domestic production industries. The mid 1960s witnessed that the penetration of television sets in Japanese households first exceeded 80 percent

(NHK, 2001), and television advertising expenditure in Japan rapidly increased from 40 billion yen in 1960 to 100 billion yen in 1964 to 200 billion yen in 1969 (Dentsu, 1986).

Many Asian countries sooner or later followed the same path as Japan did, as Waterman and

Rogers (1994) found in the mid 1990s that a majority of television programs in Asian

85 countries were domestically produced. Benefiting from economic growth, the domestic

television industry would begin producing domestic programs rather than allotting a share

of the growth to foreign programs. In such markets, it may not be practical for

U.S.-originated cable networks to offer standardized programming, even if economic conditions grow and become similar to those of the United States. To the contrary, given a market where a relatively fewer amount of programming is produced domestically, it is likely that globally standardized programs would be accepted as substitutes by audiences in the market.

In spite of the possible cultural discount in overseas markets, drama is in reality the

most internationally traded type of programming (Hoskins et al., 1997). Large-scale drama

is in general a typical example of programming requiring high budgets, which may be

beyond the financial capacity of local producers in some countries. Foreign television

programs do well when domestic television industries do not produce content of comparable

value (Mills, 1985). Indeed, Oba (2004) found that U.S.-made dramas drove the average

percentage of imported programming on the Japanese cable programming service. This is

partly because market size and production budgets of cable networks are too small to

produce original dramas and partly because the environment for reruns or multiuse of

domestic dramas is yet to be developed well in Japan.

Physical/geographic condition

The geographic region also plays a pivotal role in the development of global

television networks (Chalaby, 2004a), as they usually regard each region as a unit for their

overseas operations. Communications satellites remain organized on a regional basis (e.g.,

PanAmSat and AsiaSat). Meanwhile, Chan-Olmsted (2006) assumes that geographically clustered markets with similar stages of infrastructure development may lead to cost/resource-sharing benefits.

86 Geographic proximity among countries, which is typically associated with cultural

similarity, has caused a trend toward the regionalization of television programming (Sinclair

et al., 1996; Straubhaar, 2003; Thussu, 2000). In this context, television programs

increasingly flow within individual regions, which have their own internal dynamics.

Furthermore, the entire region can be further broken up into several smaller sub-regions consisting of several countries and territories. Straubhaar (1997) claims that a major trend of the last 20 years has been the regionalization of television into multi-country markets linked not only by language but also by other cultural elements, which might be called

“geo-cultural markets.” A good example to illustrate this in Asia is Greater China, the

Chinese geo-cultural market, which is centered in Mainland China and nations and regions around it, such as Taiwan, Hong Kong, and Macau, but extends slightly further away to large Chinese communities in Southeast Asian countries, such as Singapore, Malaysia, or

Thailand (Chan, 2004). Global television networks then might develop programming targeted at the whole of Greater China and its constituent part.

Legal environment

Media industries are among the most regulated industries, along with pharmaceutical and finance industries (Picard, 2005). According to Schudson (1994), states have always viewed broadcasting as a powerful mechanism of political and cultural control and have consequently developed extensive policy frameworks to regulate both its internal

as well as its external flows. On the one hand, the late1980s and early 1990s witnessed the

increasing liberalization of national policies, including deregulation and privatization,

which resulted in more economic opportunities for TNMCs (Carveth, 1992; Gershon, 1993;

Hollifield, 2001). On the other hand, the host countries often attempt to balance free market

economies with the political and civic responsibilities of preserving national sovereignty

(Gershon, 2000). The regulatory framework of a country shapes the business practice of

global television networks.

87 As a matter of fact, regulatory agencies in many countries still impose quotas on

broadcasters or cable networks in terms of their importation of foreign content, stipulating

the minimum amount of domestically produced programs that they must abide by.

Protection-oriented quota policies have been seen in many Asian countries. For instance, the

Chinese government restricts foreign television dramas to no more than 25% of total dramas

on pay TV systems (Lin, 2004). In Taiwan, the Cable Television Act mandates that locally

produced programs account for more than 20% of programming by domestic cable channels, while the Cable Television Law of South Korea restricts foreign programs from exceeding

30% of programming (Hong & Hsu, 1999). According to Hong and Hsu (1999), in Asian countries, the restriction commonly intends to protect both domestic production industry and national cultural identity, which could be infringed on by a flood of foreign

programming imported at a low price. Despite the rapid economic growth and relatively

stable political and social order, there remain concerns over issues of cultural autonomy in

Asia. Those policies could play a certain role in controlling the amount of globally standardized programs.

In addition to quotas, governments occasionally impose censorships on mediated

content itself. HBO was banned from providing “Sex and the City,” a comedy about New

York career women discussing and having a great deal of sex, in Singapore and had to edit

the show heavily in Malaysia (Flagg, 2000). According to Flagg (2000), HBO has to edit

every month as many as 18 new movies to conform to Asia’s conservative sensitivity. The

Cable Network Regulation of India contains a stringent programming code that allows the government to prohibit the transmission of foreign programs, which are deemed violent, indecent, or otherwise objectionable (Chadha & Kavoori, 2000). Meanwhile, Chinese regulators are sensitive not only to foreign television programming featuring sex and violence but also to foreign news reports on democracy, human rights, and religion (Weber,

2003).

88 Infrastructure/supporting sector

In the case of the cable television network, supporting activities are carried out by

cable-related industries that might play a role in the value chain to implement the primary

activities, programming. Such supporting sectors as MVPD systems and advertisers are

indispensable for cable networks, as most of them are structured so as to receive dual

revenues from both parties. Revenues from MVPD firms, i.e., carriage fees, and advertisers

can influence production budgets that cable networks capitalize on for programming. The

ampler the budgets, the more likely U.S.-originated cable networks can afford to produce

original local programs.

The development of MVPD services, including cable and satellite television, made it

possible to deliver a large number of television channels in many parts of the world, which

gave a foothold for U.S. cable networks to make inroads into overseas markets. As noted in

the first chapter, MVPD services have recently developed rapidly in the Asia Pacific region, as the average penetration rate, i.e., the proportion of households that can access those services through some form of subscription, in 14 major countries increased from 5.1% in

1991 to 29.7% in 2000 (Zenith Optimedia, 2002).

Cable networks usually send their programming services via satellite to households

with dish antennas or to cable system operators through which households receive services.

Then, cable networks receive the carriage fees from cable system operators for

programming.28 The fees are in large part determined by the popularity of the networks and

the number of subscribers that the operators have. Without carriage by the operators, networks’ reach to households is limited. Therefore, the activity of cable networks in

markets only makes sense when access to MVPD systems, notably major cable system

operators, is guaranteed in the markets. With an increasing number of networks to choose

28 Taiwanese operators paid ESPN about 18 cents, the Discovery Channel about 90 cents, and CNNI about 40 cents per subscriber (Hughes, 1997a).

89 from and a still limited amount of channel capacity, cable system operators can exercise

monosophy power, affecting the supply in the market (Picard, 2002; Shrikhande, 2001).

They do so, as retailers have a major impact on deciding which brands are displayed on

supermarket shelves. For instance, as of 2000, there were 150 channels vying for about 70

channel slots on most cable systems in Taiwan (Hughes, 2000b). In essence, the operators

can be a bottleneck for cable networks to enter the market. Meanwhile, they might seriously

look at what programming their subscribers want. As Shrikhande (2001) assumes, the

operators would show a preference for networks offering customized programming. In fact,

Asian operators often complained that Western programmers did not figure out that Asian

viewers wanted to see programming featuring people of their own ethnic background, and

not just subtitled or dubbed versions of Western programming (Hughes, 1997b).

Although carriage fees are still an important revenue source for cable networks, the

popularity of cable advertising lessens the reliance on one single revenue source and allows

for more investment in programming (Oba & Chan-Olmsted, 2005). In theory, cable networks compete with other communication media, particularly with broadcast networks, for advertising dollars. According to Picard (2002) and Warner and Buchman (1991), as audiences for broadcast television declined in the United States, much of the money formerly spent by advertisers on broadcast television went to cable television. Cable television might still have a higher cost per thousand than broadcasting television.29

However, cable networks with programming for relatively specific demographics, such as

gender, income groups, or psycographic groups, can attract advertisers who want to buy the

demographics and get better value for money (Dimmick, 2003; Parsons & Frieden, 1998).

In spite of the remarkable growth in subscriber counts, MVPD services have yet to

attract advertising dollars to a sufficient extent in many Asian markets with the exception of

29 Cost per thousand (CPM), which explains advertising efficiency, refers to the cost to the advertiser to reach 1,000 households or persons (Wimmer & Dominick, 2000).

90 Taiwan and India (Zenith Optimedia, 2002). Advertisers and agencies in many Asian

markets, on the one hand, gradually take notice of the effectiveness of cable networks and

get used to spending money on such specialized channels that allow them to target everyone

from pan-regional elite audiences to small, language- and culture-specific niches within

individual countries. On the other hand, however, an unsolved problem in many Asian

multichannel markets might be the lack of hard data advertisers want to know, such as how

many viewers they are buying, who are watching, their age, income, occupation and

hobbies, and when they watch with whom (Flagg, 1999; Hughes, 1997c). In the absence of

those audience data, advertisers are possibly loath to spend heavily, and advertising revenue

for cable and satellite television remains low compared to broadcast television.

The expansion of global television networks as well as that of global advertising

agencies was in part a function of the expansion of transnational corporations, since the

former were supposed to provide the latter with ideal platforms to advertise products around

the world, whereby further internationalizing their brands and expanding sales abroad

(Demers, 2001; Hall, 1991; Herman & McChesney, 1997; McChesney, 1998). It was expected in the early 1990s that global television networks would allow global advertisers to make a single, most cost-efficient media buy on a global basis (Fahey, 1991). If a global television network has audience, who has similar characteristics across countries and is viewed as an intermarket segment, it can be sold to global advertisers seeking to reach the segment globally and to expand their share of the world market for specific consumer goods of interest of the segment. For instance, MTV created the global youth marketplace accessible to all advertisers who want to promote youth-oriented products worldwide.

Capitalizing on this, Coca-Cola indeed signed an agreement in 1992 with MTV to place ads on its various programs reaching viewers in 100 countries (Banks, 1996). More recently,

Discovery Channel pitched spots for a documentary program, “Cleopatra’s Palace,” which was aired with 23 language versions on the same time at the same date worldwide, to such

91 global advertisers as Visa and Merrill Lynch (Cauley, 1999). Now that many firms are

global, the opportunity to be associated with a global televised event might be appealing to

them.

Presumably, global television networks provide advertisers three options: they can

opt for a global campaign and advertise in all or selected countries covered by the networks;

they can buy a whole pan-region campaign; and they can buy a local campaign and

advertise in a specific country (Chalaby, 2002). To reach consumers around the world or in

the entire region with just one media buy is certainly attractive to big-scale advertisers, since global and, to a lesser extent, regional reaches usually require a painstaking assembly of a number of media purchase (Cauley, 1999). Nonetheless, global advertisers have increasingly come to realize the effectiveness of country-specific programming channels

(Advertising Age International, 1999). With those channels, advertisers not only use more localized ads including local actors, music, and situations but also target specific audiences with a reach that is cost effective. The initial failure of STAR TV was, aside from low acceptance by potential viewers, attributed to the fact that few global and regional advertisers were interested in synchronous exposure of the same message to 38 countries

(Kraar, 1994). Advertisers felt that their message was diluted, and products advertised was not available in every country the message reached.

Global television networks with multiple local channels also attract local advertisers,

who are not interested in pan-regional services. Actually, the development of

market-specific feeds allowed STAR TV to access local advertisers in addition to regional

advertisers. Of the two, it was local advertisers that proved more lucrative: STAR TV had

around 600 advertisers split roughly 50-50 to local and regional in 1996 but had more than

900 advertisers with only 300 of these being regional in 1999 (Cooper, 2000). According to

Cooper (2000), the size of regional advertising in 1999 was estimated to be worth between

U.S.$100 and 130 million in Asia, whereas the local television advertising budgets across

92 Asian markets were worth between U.S.$8 and 9 billion. It is inferred from these data that

relationships with local advertisers are critical, and even U.S.-originated cable networks

have to make an effort to attract local advertisers in Asian markets.

It is plausible that advertisers have an impact on media content. Every advertiser

wants television programming they sponsored more tailored to their own needs, based on

their advertising campaign (Beatty, 1996). Not surprisingly, local advertisers prefer locally

adapted programming. Additionally, it is also possible that even global and regional

advertisers prefer locally adapted programming to globally or regionally standardized

programming. Most of those advertisers are fully aware of the importance of advertising

adaptation due to different consumer needs and wants, and the same logic might apply to

television programming.

Industry Competition

Given the rapid increase in the number of media outlets worldwide, consumers are

facing more media choices than ever. Under the multichannel environment, it is common

that viewers have several channels of an identical type conformed to their tastes (e.g., news channels, sports channels, etc). For instance, there are about 100 different music channels competing around the world (Forrester, 1999). It was expected that U.S. media firms would not need to worry as much about local competition in Asia when they entered the region, since few Asian media firms can approach the programming power of large U.S. media firms such as Time Warner or Viacom (Landler et al., 1994). In reality, nonetheless, the more intense the competition in a market, the more likely U.S.-originated cable networks implement programming adaptation. As noted in the first chapter, scholars claim that in order to survive in the competition with local programmers who attract local viewers with greater local cultural appeal based in domestic production, global television networks might have to offer more locally adapted programming.

93 The advent of MTV Asia prompted local firms allied with local recording labels to

launch their national versions of MTV one after another in many Asian markets (Burpee,

1996). Consequently, it was estimated that there were as many as 18 dedicated 24-hour

music channels in Asia alone in the end of 1995 (Levin, 1995). While those channels, which

understood the importance of MTV as a new programming concept, owed a stylistic debt to

MTV in large part, they, unlike MTV at the time, mainly offered programming in local

languages, including a high percentage of domestic artists’ materials (Banks, 1996; Santana,

2003). MTV Asia was confronted with the limitations of the marketing model when local music channels, which provided the content in local languages and played music much

closer to local tastes, became successful. The success of some latecomer channels then

assured MTV Asia of the necessity to split its feed according to markets to offer more

locally adapted programming. Certainly, MTV could have avoided direct competition with

local music channels if the network had positioned itself as an international network.

According to Chang (2003), however, even though MTV initially emphasized its niche as a

foreign music programmer and denied its objective of competing directly with local music

channels, it finally had to adopt local adaptation as their programming strategy to survive in

more crowded markets of the world.

With no intention to localize its programming in Asia, CNNI had distributed the

same news programs that were offered in the United States until the mid 1990s (Chang,

2003; Shrikhande, 2001). Meanwhile, the business news programming market of Asia

became competitive with the entrance of other global or regional news networks, such as

BBC World in 1991, CNBC in 1995, Asia Business News (ABN) launched by Dow Jones in

1993 and merged with CNBC in 1998, and Bloomberg News in 1998. Those news networks

and CNNI were also in rival with each other in Europe, targeted at the business community

and the top 5% of households by income (Chalaby, 2002). As seen previously, the international marketing literature suggests that competing against the same rivals in

94 different countries would lead to greater standardization rather than competing against

purely local firms. In reality, however, the impact of direct competition in the business news

segment resulted in greater financial commitment in the form of more locally adapted

programming (Shrikhande, 2004). CNNI opened its Hong Kong production facility, moved

into language customization for some Asian markets, and increased Asia-related news

programming. The case of CNNI in Asian markets implies that a global television network

eventually adopted programming adaptation even if they competed other global television networks.

Brand and Country of Origin

The past two decades witnessed the tremendous proliferation of media outlets and

the continuous fragmentation of audiences, by which the old homogeneous mass audience

became divided and subdivided into an ever-changing array of new demographic and

psychographic niche categories. In such an increasingly competitive media market,

branding is essential for media firms to become successful, since it establishes an identity and creates an image that communicates what type of content is offered to a particular target

audience (Bellamy & Chabin, 1999; Chan-Olmsted, 2006; Chan-Olmsted & Kim, 2001;

Jacobs & Klein, 1999).

In fact, more than ever, the criteria for audiences choosing media content are based

on the perceived knowledge of a media brand rather than on availability and convenience

(McDowell, 2006). On a practical level, consumers actually like brands because they

package meaning, making choices and evaluations easier. Among various media firms, most

proficient in branding strategies are perhaps cable networks whose goal is to attract highly

defined niche audiences. Giving the target audiences reason to identify with the channel,

branding is also vital in global television marketing on the grounds that well-known cable

networks in the United States may barely be known in other countries and hence need more

distinction from existing local services (Bellamy & Chabin, 1999).

95 Strong brands also reduce risk and uncertainty for consumers. When consumers

have limited prior experiences with a product category and the consequence of making a

poor decision are significant, brand familiarity can reduce unwanted purchase anxiety.

Media products are by nature experience goods, which can only be valued once they have

been consumed. The uncertainty that arises from this characteristic could be diminished by building up a reputation through a strong brand (Reca, 2006). Although consumers depend on familiar brands to reduce the risk of bad purchases, McDowell (2006) suggests that advertising-supported brands (e.g., commercial broadcast networks) are not particularly price sensitive,30 and consequences of a bad choice of those media brands are seldom

significant to viewers. It is likely that the consequence of watching a disappointing

television program are tiny compared to those of buying a defective automobile or even

spoiled groceries. Low-risk media consumption is regarded as a low-involvement

experiences in that audiences are not motivated to invest substantial cognitive efforts in

brand decision making (McDowell, 2006). Nonetheless, this may not be the case with

audience-supported media brands including cable networks, as the audience is likely to rely

on brand familiarity when purchasing or subscribing to media content products. For this

reason, it is quite probable that cable system operators and satellite broadcasters would like

to include networks with high brand equities in their lineups.

Branding or brand management can enhance a media consumer’s association,

perception, and expectation of a media product with varying degrees (Chan-Olmsted, 2006).

Brand strategies can help U.S.-originated cable networks minimize the barriers in foreign

markets, offering identity, recognition, credibility, and authority to audiences and, as

30 Within a business-to-business context in the media industry, however, pricing can be a pivotal variable for managing brand equity. For commercial broadcasters, this means capturing the attention of advertisers. McDowell (2006) claims that communicating the niche attributes and benefits to advertisers as well as to audiences is the goal of brand management. The more added values a brand name can evokes to advertisers, the more likely they will pay a premium price for a commercial or advertisement.

96 supposed in the previous chapter, eventually allowing more standardized programming

products. As seen in Table 1-2 in the first chapter, many U.S.-originated cable networks

emphasize their worldwide reach and availability in an attempt to impress on audiences that

they are global brands, whereby providing credibility and authority to themselves.

Actually, such U.S.-originated cable networks as MTV and CNNI have been successful in building strong brand images in many overseas markets. Both networks, along with the Economist, Time, Fortune, and Google, were named the most influential international media brand by Campaign Magazine (Pearson, 2003). MTV with its U.S.$6.6 billion brand valuation was also named the world’s most valuable media brand by

Interbrand & Business Week’s 2005 World’s Most Valuable Brands Report for the 6th consecutive year (Bell Global Media, 2005). Meanwhile, Discovery Channel was selected by Total Research Equitrend in 2003 as a top 10 consumer brand among 1152 measurable brands (Adelphia Media Services, 2005). As Gershon (2006) points out, high brand recognition enjoyed by those networks globally can be their core competency.

Given the inherent uncertainty about program quality viewers have until actual

viewing, not only branding but also the image of country where the program was originally made could influence audience cognition. General evaluations or opinions about countries

may be related to attitudes toward programs from the countries. Su and Chen (2000) found a

significant positive correlation between quality of the U.S. and Japanese programming

perceived by Taiwanese viewers and their impression of those countries. Audiences might

rely on country-of-origin information, i.e., what country a program is originally made in, as

an indicator of quality of the program. From this perspective, it appears that the country of

origin of television programming functions as a brand.

Havens (2003) takes notice of brand identities in international television coming

from a combination of proven ability in a specific programming genre and a clear national image, as seen in spectacular Hollywood blockbusters, Brazilian telenoveras, Australian

97 documentaries, or Japanese animations. These countries might be synonymous with these

genres. The countries can enjoy a favorable international reputation that bestows prestige on

producers of the genres (Havens, 2003). Due to the country equity of the United States,

U.S.-originated cable networks, which are not always well known outside the United States,

could be accepted in foreign markets with relative ease, if genres they specialize in are associated with areas for which their home country, i.e., the United States, is internationally renowned (e.g., entertainment or pop culture). Popular culture has always been one of the great American exports. In this case, it is probable that those networks can offer standardized programming, capitalizing on the country of origin as a brand.

Meanwhile, audiences in different markets could perceive a certain brand and

country of origin differently, partly depending on culture-specific factors. Overall, people in

collectivistic cultures of high uncertainty avoidance, such as most Asian countries, are

expected to be royal to known brands and unlikely to buy unknown brands. According to

Tai and Tam (1996), Singaporeans and Hong Kong people are very brand-conscious and

willing to pay a higher price for the prestige of owning branded products. Then, their needs

could be satisfied by U.S.-originated cable networks, because those networks, unlike free

over-the-air networks, are available exclusively to subscribers paying monthly fees and,

unlike domestic cable networks, are global brands. In fact, CNNI, Discovery Channel, HBO,

and ESPN are now established brands in many Asian markets, as acknowledged as

most-watched channels among affluent and influential people by Pan Asia Pacific Cross

Media Survey and Nielsen Media Research’s Asian Target Market Survey (Television Asia,

2003a, 2003b).

Firm Characteristics

Philosophy/orientation

The business strategies and corporate culture of today’s TNMCs often directly

reflect visions of the person who is responsible for developing the organization and its

98 business mission (Gershon, 2000). As pointed out previously, STAR TV drastically changed

their programming strategies to include local programming and languages after their initial

slackness with the pan-Asian, English programming service targeted at Asian elites. This

policy change in programming was prompted by the takeover of STAR TV by News

Corporation, which bought a controlling 64% of interest in 1993 and purchased the

remaining 36% in 1995. Rupert Murdoch, chairman and chief executive officer (CEO) of

News Corporation, underscored the necessity to commit STAR TV’s new management to

learning the nuance of Asia’s diverse cultures (Curtin, 2005; Economist, 1994). Likewise,

Viacom chairman and CEO Sumner Redstone articulates that the best broadcast would be

culturally specific (Redstone & Knobler, 2001).

Resource

To incarnate the vision and implement it as a strategy, firms have to possess and

capitalize on sufficient resources. It is possible that STAR TV initially did not have

sufficient resources necessary to implement programming adaptation (e.g. funds or

experiences) but accumulated or acquired them later. Media firms engaged in television business convert resources into television programming and are involved in their dissemination to viewers (Doyle, 2002). The funds to develop or acquire media content and the ownership of the content are regarded as “property-based resources,” which are legally protected through property rights, but the content also relies on “knowledge-based resources” (e.g., know-how and skills for innovation and management) (Chan-Olmsted,

2006).

Chan-Olmsted (2006) suggests that the property/knowledge-based typology presents

a meaningful system for classifying and analyzing media firms’ resources, particularly

highlighting the importance of knowledge-based resources in the media industry. Media

products, as talent goods, depend on people’s talent to a large extent (Reca, 2006). Wolf

(1999) shows a similar view, suggesting that the entertainment economy will place

99 enormous demands on creativity. Landers and Chan-Olmsted (2004) listed five types of

expert as knowledge-based resources necessary for U.S. television broadcast networks:

management expertise, multi-purposing expertise, audience expertise, new technology

expertise, and international expertise. It is noteworthy that such knowledge-based resources

as creativity and industry knowledge remain the essential elements in the production and marketing of the content.

In reality, however, it is unlikely for a TNMC to possess all essential resources to

compete successfully in a global media marketplace. Global television networks, even with

attractive property-based resources such as funds or the ownership of media content, as well

as knowledge-based resources including general expertise in production and marketing,

may lack international expertise to benefit from the resources in overseas markets, to

leverage their foreign affiliates, and to manage their global operation. In the early 1990s

when U.S. cable networks began expanding in Asia, many of them simply tried to provide

all-U.S. programming unmodified to keep costs down (Jensen, 1994). It is hard for media

firms to develop products that differ from their current lines for new geographical markets

in which they lack experience (Chan-Olmsted, 2004). The international expertise could be

something learned in an evolutionary process. Along with experience being accumulated,

the networks would become more skilled in international operation, master how to better

market products, understand governments, protect its intellectual property, and fight piracy

in local markets. As global television networks have matured in Asia, locally adapted

content has typically become an increasingly prominent feature in programming (Bowman,

2003).

A firm can achieve competitive advantage in the global arena by allocating resources

and coordinating activities of relationships effectively. In theory, it is supposed that the

operational dynamic of a global television network with many local affiliates lies in that it

can obtain both global efficacy and local responsiveness through flexible coordination and

100 integration of resources, due to their unique structures configured by both the global and local dimensions. On the one hand, each affiliate in local markets can benefit from sharing resources at a network level (Pathania-Jain, 2001). For example, local affiliates may rely on the network for an assured supply of resources (e.g., programming, material, or footage).

On the other hand, the network can gain knowledge from local affiliates through creative sharing and information exchange, whereby combining global leverage with sensitivity to local specificity. The affiliates are transformed into strategic partners whose skills and know-how help providing firms with worldwide competitive advantages (Chalaby, 2004b;

Sanchez-Tabernero, 2006). As a result, the entire firm functions in the same way as a coordinated, integrated network and seeks to facilitate the exchange of expertise.

Degree of centralization/decentralization

Control is associated with the capacity to exert a decisive influence on management

(Sanchez-Tabernero, 2006). A greenfield venture usually allows headquarters to control the new unit completely. For example, the Disney Channel has long tried to micromanage foreign operations out of Burbank, California, the headquarter city of Walt Disney, instead of letting local managers operate autonomously (Lacter, 2000). The local subsidiary is allowed to make only marginal alternations to a finished product to enhance its local acceptability and has only little, if any, autonomy in how material is chosen for dubbing, as every voice dubbed has to be approved by Disney’s headquarters (Pathania-Jain, 1998).

Disney is worried that a locally produced service would tarnish their vaunted brand

(Waldman, 2002). Meanwhile, a firm that has already established other overseas operations and accumulated more international experience may have a greater appreciation of the differences between markets. Then, programming strategy could be determined by a high degree of autonomy of local affiliates in view of specific local market characteristics, not being merely imposed by the corporate headquarters of the network. For instance, the highly decentralized management of MTV Networks’ international operations provides

101 local managers the ability to developing programming strategies to fit the needs of each individual market (Gershon & Suri, 2004).

Market entry mode

Media firms have traditionally followed the option continuum sequentially from exporting to strategic alliances in international expansion (Chan-Olmsted, 2006; Gershon,

2006). It is likely that establishing strong local management might be the most difficult aspect of the firms’ pioneering settlement of local television markets. In a situation where a

TNMC enters a market without the sufficient resources, they would have to rely on local partners that have the resources complementary to their own resources to garner the otherwise unavailable competitive advantage (Das & Teng, 2000). In particular, strategic alliances reduce uncertainty in local markets, in technology, or in product standards, facilitating knowledge sharing and learning (Chan-Olmsted, 2006). According to

Pathania-Jain (2001), the most significant contribution made by the local partners is to act as a knowledgeable and well-connected tour guide in the process of creating programming that would be more appealing to local audiences and more relevant to individual local markets. Indeed, many global television networks are putting huge resources behind local original productions, while forming strategic alliances with local partners to give themselves greater relevance to individual Asian market (Bowman, 2003/2004). Alliance and joint ventures have increasingly been common between TNMCs and local firms, dovetailing the benefits of knowledge of local market conditions with the advantages of scale economies (Oba & Chan-Olmsted, 2006; Sanchez-Tabernero, 2006).

Based on the international marketing literature, more emphasis will be placed on programming adaptation strategies in the case of joint-venture operations or significant license agreements with local partners than in establishing new wholly-owned subsidiaries, i.e., greenfield ventures. In reality, however, TNMCs tend to seek more equity ownership in an international market, shifting from licensing or joint ventures to establishing

102 wholly-owned subsidiaries, as their knowledge and experience about the market develops

through internal transfer of knowledge (Li & Dimmick, 2004).

Research Questions

The present study examines what factors are perceived by executives or managers,

who are in charge of programming at U.S.-originated cable networks in Asian markets, as

determinants of their programming products, assuming that external as well as intra-firm

factors could influence the decision, as indicated by the international marketing literature.

To explore the relationship between factors identified in the preceding theoretical considerations and programming strategies actually implemented by those networks, research questions (RQs) are presented. All research questions are analyzed based on data obtained through interviews with executives/managers at Asian affiliates of U.S.-originated cable networks, along with data obtained from secondary sources such as trade journals and newspaper articles and statements on company Web sites.

First of all, to grasp the big picture, RQ1 asks what programming product strategies

U.S.-originated cable networks actually employ in Asian markets.

RQ1: What programming strategies are employed by U.S.-originated cable networks in

Asian markets?

Local adaptation of television programming could include several means other than

language customization. RQ2 addresses the way U.S.-originated cable networks adapt

programming to Asian markets.

RQ2: In what way do U.S.-originated cable networks adapt programming to individual

Asian markets?

It was discussed in the literature review that the feasibility of product

standardization/adaptation might vary with the nature of the product. Then, RQ3 asks how

the programming strategy by the U.S.-originated cable networks is perceived as a function

of the nature of the programming product.

103 RQ3: How are product characteristics perceived to influence the programming

strategy of U.S.-originated cable networks?

The success of product standardization may in part premise the presence of intermarket target segments across national markets at which a firm can target its products. RQ4 addresses if such segments really exist, and, if any, how the existence is perceived to influence the programming strategy.

RQ4: How is the existence of intermarket audience segments perceived to influence the

programming strategy of U.S.-originated cable networks?

It was suggested that similarities and differences in culture between markets could affect acceptance of standardized products. With the following research question, how this assumption applies for the television programming products of U.S.-originated cable networks in Asian markets is examined.

RQ5: How are cultural similarities/differences between markets perceived to influence

the programming strategy of U.S.-originated cable networks?

Several types of environmental similarities/differences may affect the direction for product standardization or adaptation. RQ6 asks how economic, geographic, legal, and supporting environments including MVPD systems and advertisers in Asian markets are perceived to influence the programming strategy of U.S.-originated cable networks.

RQ6: How are environmental factors (e.g., economic condition, geographic condition,

regulation, and supporting sector) perceived to influence the programming

strategy of U.S.-originated cable networks?

It was proposed that the competitive intensity in a market and the differences in position among markets might drive U.S.-originated cable networks to implement programming adaptation.

RQ7: How are the competitive situation and their market positions perceived to

influence the programming strategy of U.S.-originated cable networks?

104 The brand and country of origin associated with high quality may allow firms to pursue

product standardization more easily. RQ8 assesses how the brand image of a

U.S.-originated cable network and the image of the country of origin of a product are

perceived to affect the programming strategies of U.S.-originated cable networks.

RQ8a: How are the brand image of a U.S.-originated cable networks perceived to

influence the programming strategy of the networks?

RQ8b: How are the image of the country of origin of a product perceived to influence

the programming strategy of U.S.-originated cable networks?

Finally, RQ9 assesses how intra-firm characteristics of U.S. cable networks (e.g., business philosophies, the presence or absence of managerial resources, centralization/ decentralization of authority, market entry mode, etc.) are perceived to influence the

decision on programming strategy.

RQ9: How are intra- firm characteristics perceived to influence the programming

strategy of U.S.-originated cable networks?

105 CHAPTER 4 METHODOLOGY Qualitative Research

The present study subscribes to qualitative research method for the purpose of

exploring how the aforementioned factors are actually perceived by U.S.-originated cable

networks to influence their television programming strategies in Asian markets. Qualitative

research covers a wide range of approaches and methods found within different research

disciplines, including field observations, in-depth interviews, focus groups, and so on.

Meanwhile, according to Snape and Spencer (2003), there is a fairly wide consensus that the

research method is a naturalistic, interpretative approach concerned with understanding the

meanings, which people attach to specific phenomena (e.g., actions, decisions, beliefs,

values etc.) within their social worlds. The qualitative research method is suitable for

addressing questions of how, why, and in what context specific phenomena occur and what

impacts upon or influences such phenomena (Carson, Gilmore, Perry, & Gronhaug, 2001).

It is critical for quantitative researchers to draw broader and more generalizable

conclusions about a relatively large numbers of things. In contrast, for qualitative

researchers, the aim is not to infer and generalize the findings from a sample to a population but to generate patterns and linkages of theoretical importance. It is then necessary for qualitative research to get rich and detailed understanding about a few things. To put it simply, whereas the former strive for breadth, the latter strive for depth (Beam, 2006).

The great strength of qualitative research lies in the validity of the data obtained. For

example, individuals are interviewed in sufficient detail for the results to be taken as true,

correct, complete, and believable reports of their views and experiences (Hakim, 2000).

Strauss and Corbin (1998) define qualitative research as any research not primarily based on

counting or quantifying empirical materials. Qualitative research methods provide a means

of accessing unquantifiable facts about the actual people researchers observe or talk to,

which cannot readily be converted to numerical values but are represented by categorical

106 data, by perceptual and attitudinal dimensions, and by real-life events (Berg, 2001; Yin,

2003). While the quantitative researcher tries to limit contaminating variables by conducting

investigations in controlled setting, the qualitative researcher tries to capture the normal

flow of events without controlling extraneous variables. In other words, quantitative

research requires highly controlled setting, but qualitative research takes flexibility in

natural setting.

Samples that are relatively small in scale and purposively selected on the basis of

salient criteria help identifying patterns of causations between factors on the ground, as compared with abstract correlations between variables in the analysis of large-scale surveys and aggregate data. Note that correlation does not in itself imply causation. For example, newspaper reading and income might be strongly related, but this does not necessarily denote that gaining a high salary causes people to read the newspaper (Wimmer &

Dominick, 2000). Causal inference is concerned with establishing causality and causal process, as distinct from the statistical correlations identified by most multivariate analysis

(Hakim, 2000).

The interpretation of phenomena in qualitative research is greatly influenced by

researcher’s view and value. This may lead to equivocal explanations and researcher’s

biases easily, and the subjectivity of the research makes it difficult to establish the reliability

and validity of the approaches and data analyses. Whereas quantitative methods use distinct

and precise ways to calculate reliability and several techniques that help establish validity,

these concepts may not translate well into the qualitative paradigm (Wimmer & Dominick,

2000). As for reliability, qualitative methods should be extremely systematic and have the

ability to be reproduced by subsequent researchers (Berg, 2001). One prerequisite for

allowing other researchers to repeat an earlier study is the need to document the procedures

followed in the early study. In the past, qualitative research procedures were poorly

documented, making reviewers suspicious of the reliability of the study. How subjects were

107 selected, how data were gathered, and how they were interpreted should be described in detail (Berg, 2001). With the description, other researchers can repeat the procedures and arrive at the same results.

Meanwhile, the concern over validity for qualitative research may be extended to the broader problem of making inferences. A researcher infers that a particular event resulted from some causes based on interview and documentary evidence collected as part of the study. Yet, errors of interpretation are difficult to gauge and impossible to avoid, because each researcher has his or her own unique interpretation so that no single interpretation is correct (Hollifield & Coffey, 2006). Nonetheless, a researcher’s interpretation frame should be transparent. One solution might be to allow readers to access the data itself to assess the researcher’s interpretation. In essence, qualitative research should specify explicit statements about research design and methods of data collection, analysis, and interpretation

(Hollifield & Coffey, 2006).

Case Study

Among the qualitative research methods, this study adopted the case study approach.

The term “case study” is strongly associated with qualitative research, as sometimes used as a synonym for qualitative research (Lewis, 2003). Indeed, case study seeks why something has occurred, as is the case of qualitative research. Yin (1994, 2003) defines a case study as an empirical inquiry that uses multiple sources of evidence to investigate a contemporary phenomenon within its real-life context, in which the boundaries between the phenomenon and its context are not clearly evident. This definition highlights how a case study differs from other research methods. For example, the survey technique tries to define the phenomenon under study narrowly enough to limit the number of variables to be examined

(Wimmer & Dominick, 2000). In contrast, case studies can explain the causal links in the real-life context that are too complex for surveys or experiments, which cannot reveal all the possible reasons behind a phenomenon.

108 Four essential characteristics of case study approach listed by Merriam (1988) are

particularistic, descriptive, heuristic, and inductive. The case study is focused on a particular

situation, event, or phenomenon, making it a good method for studying practical, real-life problem. The final product of a case study is a detailed description of the topic under study.

A case study should be heuristic, as new interpretations, perspectives, and meanings and fresh insights are all goals of the study (Wimmer & Dominick, 2000). In terms of the inductive characteristic, a case study usually attempts to discover new relationships rather than verify existing hypothesis, trying to build theories. Those theories are data driven, and valid, in-depth, and detailed data contribute to understanding of phenomena. Inductive reasoning then looks for patterns and associations derived from observations of the world and data themselves (Snape & Spencer, 2003).

The case study method allows researchers the ability to deal with a wide variety of

evidence to systematically investigate individuals, groups, organizations, or events. For this

purpose, documents, field observations, interviews, and physical artifacts necessary for the

investigation can be all incorporated into a case study. The variety and thoroughness of the

data would become much deeper, providing insights into complex relationship. What data

collection methods are actually employed is primarily based on the aim of research and

what can best illuminate what are studied. However, it is common to use more than one data

collection method by “triangulation” to investigate the same phenomenon. This is

interpreted as a means of mutual confirmation of measures and validation of findings (Berg,

2001). As Wimmer and Dominick (2000) suggest, multiple sources help the case study

researcher improve the reliability and validity of the study.

Case studies are in fact a useful design for research on business management,

helping researchers bridge the gap between foundational studies and practice. Many of the

insights of the resource-based view, in particular where less tangible, unobservable

resources were involved, could only be explored using a case study approach (Godfrey &

109 Hill, 1995; Lockett & Thompson, 2001). Likewise, the understanding of issues concerned with marketing in a specific context or situation requires in-depth analysis of a single or

specific case (e.g., group of people, firm, or industry) and the context in which that firm

operates (Carson et al., 2001).

Selection and Number of Cases

Selecting the cases to be studied is one of the most difficult steps in case study

approach (Yin, 2003). The selection process must incorporate the specific reasons why a

particular group of cases is selected for inclusion in the study and analysis (Hakim, 2000).

Considerations for the case selection include which cases are most typical or representative,

which contain elements that address the dominant theme of research and include variables

central to research questions, and which will provide the best access to information

(Hollifield & Coffey, 2006). The current study subscribes a “purposive sample” of

U.S.-originated cable networks in Asian countries. Unlike random or convenient

sampling,31 purposive sampling is the selective study of persons, groups, or institutions that

have particular features or characteristics, which would enable detailed exploration and

understanding of the central themes that the researcher wishes to study (Ritchie, Lewis, &

Elam, 2003). Samples are selected on the basis of certain criteria, and those who fail to meet

the criteria are eliminated.

There are a range of different approaches to purposive sampling and different types

of sample composition depending on the study’s aims and coverage. Ritchie et al. (2003)

suggest that samples are chosen to represent and symbolize prescribed groups or

characteristics (symbolic representation) and to reflect the diversity of the study population

as fully as possible. Unlike statistic representation in probability sampling required for

31 In random sampling, subjects are sampled randomly so that every member in the full population must have precisely the equal chance to be included in the eventual sample to be studied. Convenience sampling is a collection of readily accessible subjects for study (Wimmer & Dominick, 2000).

110 quantitative research, symbolic representation deliberately selected to reflect particular features is associated with the purposive sampling method. Diversity optimizes the chances of identifying the full range of factors or features associated with a phenomenon (Ritchie et al., 2003). Diversity is especially important, since it is possible that containing too little diversity prevents the study from exploring the varying influences of different factors.

Yet, there might be no ideal number of cases. The key requirement would be to include cases until understanding is reached, and the researcher reaches data saturation to analyze in appropriate depth (Carson et al., 2001; Ritchie et al., 2003). Having only one case, therefore, is justified when the case meets all the conditions of the theory or is rare or extreme, and finding other cases is so unlikely that research about the situation could be never done if the single case was not investigated (Yin, 1994). However, those situations may be somewhat unusual. Eisenhardt (1989) suggests that with fewer than four cases, it is often difficult to generate theory with much complexity, and its empirical grounding is likely to be unconvincing. For the maximum, Miles and Huberman (1994) claim that more than 15 cases makes a study unwieldy. Given the real constraints of time and cost in most research, Hedges (1985) sets an upper limit of 12 cases.

At the initial stage, the present multiple-case study designed two dimensions, consisting of four types of U.S.-originated cable networks and three Asian markets. They should be arranged to cover a range of types, reflecting the diversity of the networks and the markets (see Table 4-1). It was likely that four types of networks were necessary at the very least, given a variety of program types cable networks offer. Likewise, given the cultural and environmental diversity within the region, the present study required minimum amounts of three Asian markets.

Sample Networks

The selection of U.S.-originated cable networks was justified on three accounts in association with symbolic representation and diversity. First, each sample network should

111 operate on a global scale and also actively participate in Asian markets to ensure symbolic

representation. Second, each sample network should specialize different program types. As

mentioned previously, the program type could influence the extent to which a program is

understood in different cultural context and hence the degree of programming

standardization/adaptation. Third, each sample network should be owned by different parent

firms. This is because commitment to and emphasis on product standardization/adaptation

might vary, depending on parent firm’s business orientation. The second and third criteria

were intended to reflect the diversity of networks.

Following these three criteria, the present study selected the U.S.-originated cable

networks of Music Television (MTV), Cartoon Network, Entertainment and Sports

Programming Network (ESPN), and Discovery Channel as samples. As seen in Table 1-2 in

Chapter 1, they all expand internationally. Each of these networks principally dedicates

itself to a specific program-type, as MTV to music programming, Cartoon Network to

animated programming, ESPN to sports programming, and Discovery Channel to factual, informative programming typified by documentaries. Those networks are also owned by different parent firms, as MTV Networks by Viacom, Cartoon Network by Turner

Broadcasting acquired by Time Warner in 1996, ESPN by Disney (80%) and Hearst (20%), and Discovery Channel by Liberty Media Corporation (50%) with the remaining by Cox

Communications, Advance/Newhouse Communications, and John Hendricks, Founder, chairman and CEO of Discovery Communications.

Global news networks, such as CNN International, were excluded from the sample

so that the present study can focus on and compare programming strategies of networks

mainly providing entertainment programming, whether fictional or non-fictional. According

to viewer’s basic aim to consume media content products, a certain distinction can be made

between news and entertainment programs. Moreover, news is generally supposed to travel

more easily across borders than entertainment programs, since it is less deeply rooted in one

112 culture (Morley & Robins, 1995). To the contrary, entertainment perhaps loses more from

one country to another, due to its cultural specificity, and hence necessitates more adaptation than news to remain relevant to local audiences (Chalaby, 2002; Shrikhande,

2001). Some may wonder if Discovery Channel falls into a category of entertainment

networks. Yet, the network defines itself as a leading provider of “real-world entertainment”

(Discovery Communications Inc., 2006a). In fact, Discovery Channel often prefers “factual

entertainment programming” to “documentary programming” when referring to their own

programming,

Sample Markets

Selection

For the selection of markets, in what Asian markets sample networks have regional and local offices was examined first (see Table 4-2). Obviously, because a network is watched in 100 national markets does not mean that the network has 100 different feeds. In reality, the same feed is offered in many parts of Asia with some local languages provided as an option available through separate tracks for dubbing or subtitles. For example, viewers in Hong Kong, Malaysia, Thailand, Indonesia, and many other countries in the region get the same Cartoon Network programming at the same time as those in Singapore. MTV India is delivered not only to India but also to Bangladesh, Nepal, Pakistan, Sri Lanka, and the

Middle East. Given a programming feed available in a market where a network does not have a local office, the feed is usually shared with some other markets. Then, it seemed reasonable to exclude markets where sample networks do not have their local offices, since networks seldom develop programming strategies specific to those local markets. As shown in Table 4-2, there are substantially ten markets in Asia in which sample networks have local offices.

U.S.-originated cable networks often subdivide the Asian region into three parts

from a strategic viewpoint: Greater China including Taiwan and Hong Kong, Japan, and

113 India. Sample networks actually put importance on and intensively establish affiliates in those three parts. Comparing similar countries might miss the bigger picture of transnational

differences (Livingstone, 2003), but three parts above have different cultures with each other, probably allowing the researcher to comparatively examine the cultural impact on programming strategies. It, therefore, seemed valid to select a country in each of Greater

China, Japan, and India, respectively, as sample markets so that the present study could reach more universal conclusions about Asian countries.

It is no doubt that People’s Republic of China (China), which has increasingly

opened its television market, draws the interest of most TNMCs. Yet, the current study excluded China from the sample. Although the market potential of China is understandable, as Chan (2004) claims, what attracts TNMCs is not necessarily the current value of the

Chinese market but its potential. Indeed, it is still in the early days for most U.S.-originated

cable networks to explore limited markets in China,32 and hence it seemed too premature to discuss their programming strategies in the country. Instead, Republic of China (Taiwan) was chosen for the study as the Asia’s most mature cable television market with a penetration of over 80%. Oba and Chan-Olmsted (2005) found that Taiwan exhibited a market condition that seemed perfect for the growth of cable including abundant channels in a typical cable programming package and mature cable advertising market. Global television networks have actually given importance to the Taiwanese market as a springboard for entry into the rest of Asia and particularly into China (Chen, 2004; Tan,

1997).

32 MTV was allowed to land its 24-hour feed, MTV China, only in the Southern Chinese province of Guangdong in 2003 and reached 10 million households as of April 2005. ESPN STAR Sports does not have dedicated channels in China but two syndicated programming blocks with China Central Television and Hunan Broadcasting Group. The Discovery Channel programs were distributed in a nightly two-hours prime time block to 20 cable systems in China as of May 2002.

114 Japan was chosen as the world’s second largest and Asia’s largest television market

based on advertising expenditure, although Japan, unlike Taiwan, does not have a vastly

successful cable television industry. Many cable networks in Japan do not currently benefit

from the huge advertising market, as the total revenue of the cable industry, 281.5 billion

yen, was approximately 10 percent of that of the commercial broadcast industry, 2.7 trillion

yen, as of 2004 (Information and Communications Policy Bureau, 2006). Meanwhile, Japan

is also famous for its willingness to adopt Western pop culture aggressively. In the

international market, the country has been one of the most important countries for the U.S.

entertainment industry as the largest importer of U.S. films (Hasegawa, 1998; Wildman,

1995).

India is another important market with high potentiality for U.S.-originated cable

networks, often seen as comparable as China in terms of size. However, the current study

did not take up India as a sample, since relatively fewer fresh insights seemed to be

obtained from the further research on the programming of global television networks in the

Indian market. Previous scholarly works have already discussed the programming issue in the Indian market to some degree through the interpretation of texts (e.g., Cullity, 2002;

Page & Crawley, 2004; Thussu, 2004) or from the perspective of strategic management

(Pathania-Jain, 2001).

The present study instead selected Singapore as another sample market. It seemed

interesting to investigate programming strategy in the multiethnic country, such as

Singapore. It is pointed out that American programs are more accepted in Singapore where

English is more widely spoken, and youth embrace Western pop culture (Godard, 1994).

More important, Singapore shapes itself to become Asia’s media hub. Singapore’s geographical location in Asia, political stability, financial and legal infrastructure, and

technological advancements all make it a strategically attractive location for global

television networks (Daswani, 2005). In fact, many U.S.-originated cable networks have

115 established their Asian regional headquarters in Singapore. It seemed significant to delineate opposing views, if any, on programming strategy between regional headquarters and local offices. Among four sample networks, three but Cartoon Network have their regional headquarters in Singapore, such as MTV Networks Asia, ESPN STAR Sports, and

Discovery Asia. In terms of Cartoon Network, Cartoon Network Asia/Pacific, their regional headquarters in Hong Kong, is responsible for their operation in the Asian markets except for Japan.

Characteristics

Table 4-3 summarizes size, economic, advertising, multichannel, language, and cultural data of the sampled markets as well as those of the United States for reference. In large pat because of the difference in land areas, the population in sample national markets varies tremendously, ranging from 4.5 million in Singapore to 127 million in Japan. Yet, even the population of Japan is about two fifth as large as that of the United States. In terms of the economic environment, Japan is the second largest economic power after the United

States. Meanwhile, Singapore and Taiwan are often referred to as Asian NIEs (Newly

Industrializing Economies), rapidly expanding economies that depend heavily on foreign exchange. Along with the rising purchasing power, many consumers in both countries are perhaps more willing to pay a higher price for brand name products. In terms of the penetration of multichannel media, Taiwan, with a penetration rate as high as 80%, has a multichannel market as matured as the United States has, while Japan and Singapore might be regarded as moderately developed multichannel countries. The positive relationship between multichannel penetration and advertising revenues is logical as a medium might start attracting advertising dollars only when it has accumulated a substantial amount of audience. In terms of language, Singapore is one of a few Asian countries where English is spoken as the official language. Many young Singaporean audiences whose first language is

English enjoy watching American television programs without dubbing or subtitles.

116 Learning English is compulsory for most secondary and high school students in both Japan and Taiwan, but the proportion of population who speak English fluently is not high in both countries.

Asian cultures are commonly characterized by high power distance, collectivisim, and long-term orientation, relative to American cultures, which are characterized by low power distance, individualism, and short-term orientation. These characteristics are clearly shown in Figure 4-1 that illustrates Hofstede’s multidimensional cultural index scores for three Asian countries sampled for the current study and the United States. It is also noteworthy that some dimensions show variations among those three Asian cultures.

Although Japan is a masculine country, this does not hold true for other two countries. In terms of uncertainty avoidance, Japan and, to a lesser degree, Taiwan have high scores, whereas Singapore has a low score. Differences in product evaluation could be attributed to differing score in uncertainty avoidance

Data Sources and Collection

As noted previously, multiple data sources can be incorporated into a case study to view a phenomenon from various angles and to complement with each other sources. Two data sources of evidence were used in the present study: personal interviews as a primary source and existing documents as a secondary source. Personal interviews form the foundation for the current research, while secondary sources provide additional support for the research.

Personal Interview

Data for the present study were mainly gathered through personal interviews with firm decision-makers, such as executives or managers, who are responsible for programming or marketing of sample U.S.-originated cable networks in Asian markets. The interviews were intended to obtain descriptive data related to their programming practices.

It appeared that in-person interviews would provide a great depth of information about a

117 research topic that other researchers had hardly collected before. The present study is

focused on what factors are perceived by executives and managers with decision-making

authority as determinants for the product strategy of U.S.-originated cable networks in

Asian markets. To gather data for the topic, there might be no better way than personal

interviews, since information necessary for the research are thoughts, opinions, and

motivations of officials responsible for the marketing of programming products, and those

types of information can be fully drawn only through in-person interviews. As Taylor and

Bogdan (1998) claim, interviewing provides a useful means of access particularly when

researchers are interested in understanding the perceptions of participants. Hollifield and

Coffey (2006) suggest that almost any research projects that required data from senior

media executives would have to employ interviews.

Nonetheless, gaining access to busy executives and managers is generally difficult.

The author made the fullest possible use of personal and professional networks to generate

interview subjects. It is assumed that achieving access to those officials would not have been possible without a network of personal contacts and snowball effect.33 Appendix A

lists the name and title of interviewees. How they were recruited is described in detail in

Appendix B. After the meetings were arranged, the four Japanese, three Taiwanese, three

Singaporean, and one Hong Kong offices were visited to conduct the interviews.

Interview Design

Interview methods typically include the following three types: structured interview,

semi-structured interview, and non-structured interview. A structured interview has a list of

predetermined questions, and interviewers do not deviate from the list; a semi-structured

interview has some predetermined questions but can follow interesting inquiry introduced by interviewees in a flexible manner; and a non-structured interview is free-flowing with no

33 The basic strategy of snowballing involves first identifying several people with relevant characteristics and interviewing them. These subjects are then asked for the names of other people who posses the same attributes as they do (Berg, 2001).

118 predetermined questions (Hollifield & Coffey, 2006). The non-structured type is typically used in intensive, in-depth interviews. According to Wimmer and Dominick (2000), intensive interviews are customized to individual respondents, whereas in personal interviews, respondents are usually asked the same questions.

The present study employs semi-structured interviews, which are located somewhere between completely structured and completely non-structured interviews. Although most interesting, unexpected responses are often obtained through non-structured interviews, multiple-case methods require structured or, at least, semi-structured interview styles to find similarities or differences (Hollifield & Coffey, 2006). Structured questions offer respondents approximately the same stimulus and provide researchers comparable responses across cases. Unless the same things are asked, it might be hard to compare the responses. Meanwhile, executives tend to respond more positively to a conversational style that allows them some control of the direction of the interview, while being less likely to commit the time and patience required for unstructured interviews (Hollifield & Coffey,

2006).

Interview Instruments

Questions asked in interviews were predetermined to explore research questions presented in Chapter 3. Questionnaire design should reflect the basic purpose of the research. Again, the present study examines what factors are perceived by networks as determinants of their programming products, assuming that external as well as intra-firm factors could influence the decision. A questionnaire survey, therefore, was designed to investigate their practices and perceptions. By request, respondents were sent in advance a list of questions, which might be asked in the interview (see Appendix C). A series of those scripted questions was used as a major guideline in interviewing to keep respondents on the right track.

119 Although the same questions were asked during actual interviews for the current study, the question order was not strictly controlled. Moreover, as interviews took a form of semi-structured interviews, some questions were added or skipped ad hoc, if they seemed necessary or unnecessary, and deviations from the predetermined questionnaire were freely accommodated. These were partly because the duration given for each interview greatly varied depending on respondent’s schedule, actually ranging from 45 minutes to two hours; partly because respondents might not remain interested in very formulaic interview process; and partly because the interviewer needed to generate additional questions arising from interactions during the interview. In addition, it was common that further inquiries for subsequent interviews were conceived from the information obtained in preceding interviews. Interviews were conducted at respondents’ offices or conference rooms without any intervention by third parties.

Interview Procedures

It has often been pointed out that cross-national management is a very difficult topic to deal with (Adler, 1983; Tayeb, 2001). Among others, linguistic differences are typical difficulties in such research. In the present study, all interviews were conducted by the author in either Japanese or English, depending on the native tongue or preference of the respondent. The only exception was the interview with a programming manager of MTV

Taiwan, who preferred an interview in Mandarin Chinese. The interview coordinator was present to serve as an interpreter between Mandarin Chinese and English. Burg (2001) suggests that ideally interviews must be conducted at the level of language of the respondents. Otherwise, the attention of the respondent is lessened, and communication problems could become severe in the worst case scenario. Meanwhile, Broadfoot (2000) notes that interviews must be conducted by interviewers who are fluent in the language in question. It might be difficult for the interviewer to immediately react in foreign language to certain statements made by interviewees, which rise unexpectedly during the conversation.

120 In those lights, the interviews in English for the present study had certain limitation, as

neither some respondents nor the author was native in English. However, as Beuselinck

(2000) suggests, it is difficult to eliminate language barriers completely.

The interview procedures obviously involve human subjects as respondents. All

research designs and instruments used in the research were reviewed by the University of

Florida Institutional Review Boards (IRB). Subjects were fully informed about the

processes in the research so that they voluntarily consented to participate in the present

study (see Appendix D for a copy of the informed consent sheet). The author obtained

informed consent from respondents before including them in the research. With the

permission of the involved subjects, the interviews were tape-recorded. The tape recording

might lead to the disadvantage of being highly obtrusive, causing respondents to be

needlessly careful about their choice of words (Singleton, Straits, Straits, & McAllister,

1988). To avoid increasing evasiveness and reducing reliability of interviews, it was stated

prior to the actual interviews that respondents were expected to answer questions to the

extent that they can do. No answer appeared better than any prevarications.

All interviews tape-recorded were transformed into English written text. Some

inaudible comments were inquired to respondents later by emails. When interviews in

Japanese were translated into English, “back translation” was adopted to keep linguistic

equivalence in the two languages. In this procedure, interview materials transcribed in

Japanese were first translated to English by a bilingual speaker of both languages and then

from English to Japanese by another bilingual speaker to clarify or remove discrepancies in meaning as much as possible. See Appendices E-P for complete transcripts of all interviews.

Existing Documents

In-person, semi-structured interviews certainly provide an ideal vehicle for

exploring each respondent’s perceptions. However, qualitative researchers rarely rely on a

single method of gathering data, because each method could bring its own biases. For this

121 reason, primary data obtained through interviews for the present study were supported by secondary data found in existing documents, including articles in trade journals and newspapers and statements on company Web sites. These articles were easily accessible and relatively inexpensive.

The purpose of the secondary data was twofold. First, as a prerequisite to the collection of primary data through interviews, information about sample networks was collected in advance. The more details relevant to the subject of the investigation that can be gathered in advance, the less time has to be wasted during the interview, and the clearer the researcher’s focus on what information is needed from the interviewee (Doyle & Frith,

2006). Second, those data provided a wealth of evidence, complementing data obtained from interviews, such as ideas and opinions concerning programming strategies, which were previously made by other executives of sample networks. Convergence of multiple sources of evidence can eventually address the potential of construct validity, providing multiple measures of the same phenomenon and helping build confidence in the findings.

By using multiple sources of evidence, the present study attempted to systematically investigate the product aspect of U.S.-originated cable networks’ marketing strategy.

The trade journal is defined as a periodical publication focusing on issues and information concerning a particular business or industry. Executives’ statements concerning programming strategies were gleaned from articles in such trade journals as “Ad Age

Global,” “Advertising Age International,” “Billboard,” “Broadcasting & Cable,” “Cable &

Satellite Asia,” “Multichannel News International,” “Television Asia,” “Television Business

International,” and “Variety,” as well as in such newspapers as “The New York Times” and

“The Wall Street Journal.” Company Web sites provided basic data on the firm including its philosophy and activity.

122 Analytical Method

Unlike quantitative research, there are no specific formulas to guide the qualitative

researchers to analyze data (Yin, 1994). In the analytical strategy of explanation building,

the researcher tries to identify patterns, similarities, and differences within and across cases

and to construct a theoretically relevant explanation about the causes of the phenomenon

under study.

A single-case study design has the primary weakness in that it is not grounded in

comparison, and therefore it is difficult to know whether the phenomenon observed in a single case is unique to that case and condition or whether it is commonly occurs in other circumstances (Hollifield & Coffey, 2006). Multiple-case designs to compare and contrast different cases is preferred over single-case designs, since the former allow studies to present more rounded, compelling, and complete accounts of social issues and processes, increasing chances of producing robust results and leading to richer theory building (Carson et al., 2001; Hakim, 2000; Yin, 2003).

To provide a more complete analysis of data, a multiple-case study usually

necessitates two stages of analysis: within-case analysis and cross-case analysis. The within-case analysis treats each case as a single case. Furthermore, it is customary for case analysis to provide cross-case analysis, which emphasizes reasons why differences occur, with an explanation of why the differences were found (Carson et al., 2001; Yin, 2003).

According to Eisenhardt (1989), the overall idea of cross-case analysis is to improve the likelihood of achieving an accurate and reliable theory. Cross-case analysis is the most critical part of a multiple-case study (Yin, 2003). The present study is a multiple-case study, employing the constant comparable analysis method, which has originally developed from

“grand theory method” (Glaser and Strauss, 1967). This induction method, which emphasizes the observation and theory building, involves first taking a piece of information

123 (e.g., a statement in an interview) and then comparing it with all others that are similar or different to find patterns until all are compared with each other.

The present study first analyzed a single case of a network, examining data within

each network. Suppose that a comment was made by an interviewee of MTV Japan with

regard to a certain factor, which is perceived to influence their programming decisions.

Then, the comment was compared with comments in regard to the same factor by

interviewees of MTV in other markets. Those comments were also confirmed with existing

documents, if available. With these procedures, some patterns within a case of MTV

Networks about the relationship between the factor and programming strategies might be

found. Next, at the cross-case phase, findings from the examination of a network were

compared with those of other sample networks. Some patterns across networks about the

relationship between the factor and programming strategies might be highlighted. These

procedures continued until all networks were compared to answer research questions.

Table 4-1. Sample matrix based on two dimensions. Dimension 1: U.S.-originated cable network Dimension 2: Market Network A Network B Network C Network D Country X Country Y Country Z

Table 4-2. Sample networks’ offices in Asia. MTV Cartoon Network ESPN Discovery Channel China - China China Hong Kong Hong Kong Hong Kong Hong Kong India India India India Indonesia - - - Japan Japan Japan (Sports-i ESPN) Japan Korea - Korea (MBC-ESPN) - Philippines - - - Singapore - Singapore Singapore Taiwan Taiwan Taiwan Taiwan Thailand - - - Source: Discovery Communications Inc. (2004); ESPN STAR Sports (2005); LyngSat Address (2005); Time Warner Inc. (2005c); Viacom Inc. (2005b); Walt Disney Co. (2004a).

124 Table 4-3. Characteristics of sample markets Japan Singapore Taiwan United States Area (square kilometer) 377,835 693 35,980 9,826,630 Population (millions, 2006) 127.5 4.5 23.0 298.4 GDP (US$ billions, 2005) 4,018 124 631 12,360 GDP per capita (US$, 2005) 31,500 28,100 27,600 41,800 Multichannel penetration 55.3 33.0 83.6 86.3 (% of homes, 2002) Multichannel advertising 245.2 15.1 483.2 9,548 (US$ millions, 2000) Major languages Japanese English, Mandarin, English, Mandarin, Taiwanese Spanish Malay, Tamil Index for cultural dimensions Power distance (PDI) 54 74 58 40 Individualism (IND) 46 20 17 91 Masculinity (MAS) 95 48 45 62 Uncertain avoidance (UAI) 92 8 69 46 Long-term orientation (LTO) 80 48 87 29 Source: Central Intelligence Agency (2005), Hofstede (2001); World Screen (2005); Zenith Optimedia (2002).

100

80 Japan 60 Singapore 40 Taiwan United States 20

0 Power Distance Uncertain Avoidance Orientation Long-Term Masculinity Individualism

Source: Hofstede (2001)

Figure 4-1. Cultural dimensions for sampled markets and the United States.

125 CHAPTER 5 RESULTS General Overview

Preceding the analysis in regard to each RQ, the present study takes as a first step a

general view of how sample networks have expanded into overseas markets, in particular into Asian markets.

MTV

MTV has grown as the leading authority on music for generations of music fans and

a worldwide pop culture phenomenon (Viacom Inc., 2005b). The network was launched in

1981 as a joint venture between Warner Communications and American Express and

became available in most regions of the United States in the mid-1980s with the nationwide

spread of cable television. In 1986, MTV, along with VH1 and Nickelodeon, was sold to

Viacom. MTV is among the first U.S. cable networks to establish their programming in

Europe in the late 1980s (Banks, 1996). Since then, the network has aggressively pursued

international expansion. MTV now reaches more than 340 million households worldwide as

the world’s most widely distributed television network, and eight out of ten MTV viewers

live outside the United States (Capell et al., 2002; Viacom Inc., 2005b).

MTV Asia was originally launched in 1991 as one of STAR TV’s five channels,

targeted at a pan-Asian market. In 1994, however, MTV Asia broke with STAR TV after

conflicts over programming and licensing income (Goll, 1994; Levin, 1994). MTV

Networks Asia, which was re-launched in 1995 as a joint venture between MTV Networks

and PolyGram and later became a wholly-owned subsidiary of the former, has established

four national/regional channels: MTV Mandarin (now known as MTV Taiwan) and MTV

Southeast Asia (now known as MTV Singapore and Malaysia or MTV SAM) in 1995,34

MTV India in 1996, and MTV China in 2003. MTV also has independently-operating

34 MTV Southeast Asia had covered a region including Singapore, Malaysia, Indonesia, Thailand, and the Philippines until it was split into several country-specific feeds.

126 business units from MTV Asia for some other Asian markets: MTV Japan, MTV Korea,

MTV Philippines, and MTV Thailand, all launched in 2001, and MTV Indonesia, launched in 2002. These are all joint ventures between MTV Networks and local partners to ease the transition into new markets (see Table 1-3 in Chapter 1).35 MTV reaches over 150 million

households across the region, including 124 million households in 21 countries and territories served by MTV Asia alone (Viacom Inc., 2005b).

Cartoon Network

Cartoon Network, which is specialized in animated entertainment, was created in

1992 by Turner Broadcasting as an outlet for their vast library of animation (Turner

Enterprises, 2005). Turner Broadcasting began expanding the network into Europe and

Latin America in the following year. After the purchase of Turner Broadcasting by Time

Warner in 1996, the network came under Time Warner’s umbrella and currently offers more

cartoons and characters than any other television network (National Cable &

Telecommunications Association, 2005).

Cartoon Network entered the Asian market in 1994, combined with Turner Network

Television (TNT), which was later renamed Turner Classic Movies (TCM). TNT & Cartoon

Network reached 2 million households in Asia as of 1995, airing such animated series as

“The Fred Flintstones,” “Tom and Jerry,” and “The Yogi Bear Show” for 14 hours in the

daytime and TNT’s movies for 10 hours at night. At that time, the Disney Channel,

Nickelodeon, and the Fox Kids Network had not even entered the Asian market (Mifflin,

1995). Following the purchase of Turner Broadcasting by Time Warner in 1996, TNT &

Cartoon Network Asia/Pacific began providing three separate, country/region-specific feeds

for India, Southeast Asia, and Australia in 1997. In 2001, Cartoon Network was converted

into a full-fledged 24-hour network in the region. Cartoon Network Asia/Pacific now has

35 MTV Networks has agreed to acquire the remaining interest in MTV Japan from a joint venture partner to give themselves 100% ownership. The local partner was instrumental in bridging the MTV brand to Japan in 2001 (World Screen, 2006).

127 five regional programming feeds (Australia and New Zealand, India and the sub-continent,

the Philippines, Taiwan, and Southeast Asia36), offered in six languages including English,

Mandarin, Thai, Hindi, Tamil, and Korean, and reaches over 32 million households in 23

countries (Television Asia, 2004). In addition, the network also launched Cartoon Network

Japan in 1997 as an independent entity from Cartoon Network Asia/Pacific. The channel is managed by Japan Entertainment Network, a joint venture between Turner Broadcasting

(80%) and a major trading firm Itochu Corporation (20%).

ESPN

A year after their launch in 1978, ESPN was purchased by a joint venture between

Getty Oil Co. and Nabisco and in 1984 by ABC, which later became part of The Walt

Disney Co., and the Hearst Corp. By 1991, the network had become the most widely

viewed cable network, especially among men, and the most widely distributed cable

network in the United States (Warner & Wirth, 1993). As the “world wide leader in sports,”

ESPN continues to grow and expand internationally as well, reaching sports fans around the

globe (Walt Disney, 2004b).37

ESPN entered the Asian market in 1990 with their ownership of 20% of Japan

Sports Channel, which later became Sports-i ESPN.38 While ESPN has launched ESPN

Asia in 199239 and ESPN India in 1995, the network also has eagerly sought joint ventures

36 Cartoon Network Southeast Asia covers a wide range of Asian countries, including Hong Kong, Singapore, Malaysia, Thailand, South Korea, Vietnam, Cambodia, Macao, Brunei, Fiji, and so on. Viewers in those countries get the same Cartoon Network programming at the same time. 37 A key reason behind Disney’s acquisition of ABC was the worldwide value of the ESPN brand name (Bellamy, 1998). 38 Sports-i ESPN was taken over by J Sports in November 2005. Consequently, Sports-i ESPN was renamed J Sports ESPN in April 2006, a month after the interview for this research. J Sports is owned by Jupiter Sports Inc. (33%), a 50:50 joint venture between the Sumitomo Group and the Liberty Media Group, Itochu Corporation (15%), Sky Perfect Communications Inc. (15%) etc. ESPN’s share is no more than 3%. 39 ESPN Asia currently covers various Asian markets including Singapore, Malaysia, Thailand, Indonesia, Vietnam, Laos, and Cambodia. The feed is offered exclusively in English.

128 in Asia. In 1996, the network entered into ESPN STAR Sports, a 50:50 joint venture with

STAR TV, which owned and operated two sports channels, STAR Sports Asia and STAR

Sports India. This venture was created in order to avoid intense and expensive competition

for sports programming rights in Asian markets (Cable & Satellite Asia, 1996b). Indeed,

ESPN STAR Sports integrated resources, which had been held separately by both networks

until then, such as all cricket broadcasting rights in India held by ESPN and the all rights for

soccer and hockey events in India held by STAR Sports (Hughes, 1996). ESPN STAR

Sports later launched ESPN Taiwan in 1998, STAR Sports Southeast Asia in 2001, and

ESPN Hong Kong and STAR Sports Hong Kong in 2004. Meanwhile, ESPN STAR Sports

also set up a joint venture with South Korea’s broadcaster MBC to start MBC-ESPN Sports in 2001. In 1993, ESPN reached only 600,000 Asian households; in 2005, it reached 128

million households, in addition to the 57 million households reached by STAR Sports (Goll,

1993; Media Partners Asia, 2005). ESPN STAR Sports has 60,000 square-feet of state-of-art

production facilities and earth station in their headquarters in Singapore.

Discovery Channel

Discovery Channel primarily offers documentary programs featuring various themes,

such as science and technology, nature and wildlife, adventure, history, world cultures,

travel, and health. John Hendricks, a former University of Maryland fundraiser and

media-relations consultant, established Discovery Communications in 1985 to launch the

network with U.S. $5 million of start-up funds. Yet, the concept of an all-documentary cable

network was hard sell, as few people believed that that sort of network would find an

audience even in the rapidly growing U.S. cable markets (Westcott, 1999). When the

network suffered from financial difficulties in 1986, the cable industry’s first joint equity

venture between a network and cable operators, including Tele-Communications Inc., Cox

Communications, Newhouse Broadcasting Corp., and United Cable Television Corp., was made to invest U.S.$20 million to Discovery Channel (Strohm, 1993). The network began

129 expanding into international markets in 1989 with the start-up of Discovery Channel Europe

(Walley, 1995).

Discovery Asia, launched in 1994, had established by the end of 1996 six feeds for

Australia and New Zealand, Taiwan, Southeast Asia, the Philippines, Malaysia, and Japan,

which are transmitted from the company’s 85,000 square-foot regional headquarters in

Singapore (Dickson, 1996). At present, Discovery Channel has 16 feeds and reaches over

325 million households in 23 countries and territories across the Asia Pacific region

(Discovery Communications Inc., 2006a).40 The network holds the distinction of being the most watched channel in Asia, according to 2003 Pan Asia Pacific Cross Media Survey, which complied data from 11 Asia Pacific countries (Television Asia, 2003a).

Programming Products

RQ1 addresses what programming product strategies U.S.-originated cable networks

actually employ in Asian markets. In order to present a comprehensive vision of their programming strategies, the present study first examined the extent to which their programming is indeed accounted for by programs supplied from the network and by those originally produced or acquired at the local level, respectively, and how these practices vary between markets. Note that network programs might be analogous to standardized programming products but are not exactly the same, because network programs are oftentimes offered with subtitles or dubbing in local languages, if necessary. Executives and managers interviewed were commonly more conscious of the classification of their programming products into network programs or their originally produced or acquired

programs rather than a concept of product standardization/adaptation.

40 Aside form this, Discovery Channel India, which is managed by Discovery Networks India based in New Delhi, now reaches more than 28 million households (Discovery Communications Inc., 2006b).

130 MTV

At present, only 10-20% of MTV Japan’s programming is devoted to programs supplied from MTV Networks. The situation is almost the same in Taiwan. In sum, approximately 80-90% of the programming schedule of both MTV Japan and MTV Taiwan is taken up with locally produced, music-based entertainment shows, with only a limited portion actually filled up with programs supplied by the network and subtitled with local languages. However, this is not the case in MTV SAM. Approximately 60% of MTV

SAM’s programming is content originally produced and supplied by foreign MTV channels, including many shows from MTV U.S.

Programs distributed within MTV Networks are mainly reality or make-over shows

originally produced by MTV U.S., such as “The Osbournes” or “Pimp My Ride.” Scott

(2005) suggests that such in-house shows have helped MTV’s international success. Yet,

MTV Japan’s vice president of research and planning Tetsuya Togawa (personal

communication, March 15, 2006) assumes that the amount of content supplied by MTV U.S.

for overseas MTV channels is quite small. Unlike MTV U.S., which has increasingly put

more emphasis on non-music programming in recent years, Asian MTV channels still rely

on music material heavily for their programming, as 90% of the programming in Asia is

fundamentally about music (Billboard, 2001). Along with the reality shows mentioned

above, MTV U.S. also supplies to Asian MTV channels the telecasts of music events,

including “The MTV Video Music Awards (VMA)” or live concerts of some famous artists.

Yet, a majority of music programs are originally produced by local MTV channels.

Cartoon Network

Animated programs currently offered by Asian Cartoon Network channels are

roughly categorized by suppliers into the following three types: Cartoon Network Originals

(CNOs), which are usually produced at the initiative of Cartoon Network U.S. and

distributed to their worldwide affiliates; animated programs from productions related to

131 Time Warner, such as Warner Brothers or Hanna-Barbera41; and “third party” content

purchased from production companies unrelated to Time Warner. While most CNOs and

Warner animation series are American-made, third party content includes those from

various countries around the world.

As noted earlier, Cartoon Network was originally created as an outlet for Turner

Broadcasting’s animation library. In this context, it made sense that the network’s

programming lineup consisted primarily of titles from its own library. Nonetheless, Cartoon

Network today is not merely an outlet for their original animations. 18% of the programming for Cartoon Network Japan is made up of CNOs, while 12% is Time Warner content and 70% third party content. For Cartoon Network Taiwan, 30% is CNOs, 43% is

from Time Warner’s library including 34% from Hanna-Barbera, and the remaining 27% is

from third party. Of Cartoon Network Southeast Asia’s programming available in Singapore,

CNOs account for 60%; content from Warner Brothers and Hanna-Barbera constitutes 30%;

and third party content makes up the remaining 10%. Cartoon Network Southeast Asia,

largely made up of CNOs, plays a more important role as an outlet for CNOs in comparison

with Cartoon Network Japan or Taiwan.

ESPN

As was the case with Cartoon Network, when ESPN was launched in Asia, most of

the programming originated from the United States, and the network was accused by

viewers of being more American than Asian (Koranteng, 1995). About 50% of Sports-i

ESPN’s programming today is accounted for by foreign sports programming. However, this

does not mean that they offer a number of network programs. In reality, programs from

ESPN occupy a very small part of their programming. J Sports manager of planning and

control group Ichiro Hase (personal communication, March 14, 2006) claims that Sports-i

41 Hanna-Barbera is an American animated cartoon production company, which was purchased by Turner Broadcasting in 1991. It was absorbed into Warner Brothers Animation in 2001.

132 ESPN do not rely heavily on ESPN content to get by under the present circumstances, since

they cannot get much of the so-called “killer content” from ESPN due to rights issues.

ESPN does not have the broadcast rights in Japan for many popular programs on ESPN

U.S., including Major League Baseball (MLB) or National Football League (NFL), and

Sports-i ESPN ends up compiling their own programming (I. Hase, personal communication, March 14, 2006).42

ESPN Taiwan and ESPN Asia are properties of ESPN STAR Sports, a joint venture

between ESPN and STAR TV. About 80% of the programming for ESPN Taiwan is taken up with telecasts of foreign sporting events. Yet, as in the case of Sports–i ESPN, the majority of ESPN STAR Sports programming does not come from ESPN. Although soccer programming, for example, is often shown on ESPN Asia, ESPN STAR Sports usually negotiates for the purchase of popular soccer content with individual sporting event organizations such as the English Premier League or the Union of European Football

Associations (UEFA). The broadcast rights to those events are usually secured by ESPN

STAR Sports so that the events can be televised on their channels in individual markets, including ESPN Taiwan and ESPN Asia.

Discovery Channel

According to Monica Mather, vice president of international advertising at

Discovery Networks Europe, around 70% of programming is consistent around the world

(Campaign, 2002). Similarly, Discovery Asia’s senior vice president of programming and

creative services James Gibbons (personal communication, August 29, 2006) points out that

probably 60% to 70% of the programming is shared across most regions. In particular,

42 As a general rule, a television network needs to acquire broadcast rights from an event organizer in order to telecast a sporting event. The broadcast rights are usually granted for a given national territory on an exclusive basis. The exclusivity is considered necessary by networks to guarantee the value of a given sports program (Meltz, 1999). Consequently, the bargaining power of broadcast right holders increases, and the cost of rights to some special sporting events escalates.

133 much of the programming on local Discovery channels is made in the United States. About

60% of the programs produced by Discovery U.S. are used abroad (Shin, 2005), and about

60% of the content on their Asian channels is shared with Discovery U.S. (J. Gibbons, personal communication, August 29, 2006). In essence, the programming of local Discovery channels is in large part accounted for by network programs, in particular those produced by

Discovery U.S.

Cross case analysis

Table 5-1 summarizes the percentage of programs supplied by networks on the

schedules of each local channels sampled for the current study. It appears that the ratio

significantly differs among networks and among markets. MTV and Cartoon Network

channels for the Japanese and Taiwanese markets offer a relatively small amount of network

programs (10-30%) in comparison with their services for the Singaporean market (60%).

Much programming of Asian ESPN channels is acquired or produced themselves, since

ESPN Networks cannot supply to their Asian affiliates every sporting events they offer in

the United States due to broadcast rights issues. In contrast, Discovery Channel distributes a

number of programs worldwide, whereby the programming of their Asian channels is

largely accounted for by network programs.

Localization

As described in the first chapter, many scholars suggest that localization is the

prevailing strategy for many global television networks at this time of day. It was actually

found above that locally produced or acquired programs are offered to a greater or lesser

extent by U.S.-originated cable networks in sample Asian markets. The question in regard to

RQ2 is how executives and managers of U.S.-originated cable networks consider

localization strategy, as well as in what way their programming products are actually

adapted to individual local Asian markets.

134 MTV

MTV Networks has established local channels as diverse as the major languages

spoken in Asian markets. MTV Networks Asia’s senior vice president of programming, music, and talent Mishal Varma (personal communication, August 28, 2006) claims that

each Asian MTV channel provides content almost exclusively in the local language, based

on the premise that each local Asian market has a very unique music style basically coming

from its own language. It has been believed that MTV plays the same music videos

throughout the world, specifically with a focus on popular American ones. In fact, when

launched in 1991, MTV Asia devoted roughly 90% of the music presented to U.S. and U.K.

artists, with scant attention given to indigenous artists (Ebert, 1991). However, it became

clear that a music lineup too oriented toward international music did not respond to what

their target audience really wanted in many local markets. The network found that the

programming just to put music tailored to the American audience into different countries

often did not work.

A simple fact is that domestic music is generally preferred to foreign music in local

markets.43 Asian MTV channels have increasingly become to favor the music videos of

domestic artists (Hau, 2001; Kan, 2003). At present, both MTV Japan and MTV Taiwan

maintain their play-lists consisting of 70% domestic music, with the remainder made up of

foreign music. MTV Japan’s CEO Yu Sasamoto (personal communication, March 15, 2006)

claims that it would make no sense to air only foreign music in the Japanese market where

80% of CDs sold are Japanese music. The music selection by MTV SAM, however, is

different from MTV Japan and MTV Taiwan. The ratio of local music is relatively low,

accounting for about 30%, and this is mainly Malaysian music rather than Singaporean

43 For instance, in Thailand, a survey showed that 95% of Thai teenagers preferred local music to foreign music (Santana, 2003).

135 music. Varma (personal communication, August 28, 2006) points out a huge demand for international music in Singapore.

It is noteworthy that for MTV’s music programming, localization is not necessarily

synonymous with offering local music. For example, MTV Taiwan’s programmer Sharon

Chang (personal communication, July 26, 2006) states that MTV Taiwan rarely plays songs

sung in Taiwanese language, not by Mandarin Chinese,44 because they are “too local” (S.

Chang, personal communication, July 26, 2006). By the same token, MTV Japan would

never play Japanese enka songs, which are especially popular among the older generations.

Those music genres are generally not supported by their target audience. Togawa (personal

communication, March 15, 2006) asserts that MTV Japan is always conscious of music genre as well as whether it is local or foreign music. Varma (personal communication,

August 28, 2006) concludes that localization has to reflect the tastes, the likes, and the

trends of target audience in a particular market.

According to Varma (personal communication, August 28, 2006), international

music that local audiences like is played in a local context in MTV’s localization process.

As a result, a recent approach commonly seen on MTV channels in Asia is a mix of

international and local music, depending on the demands of the individual market

(Television Asia, 2000). In essence, localization for MTV’s music programming is to feature music, regardless of whether domestic or international, demanded by their target audience in local markets. Certainly, as Varma (personal communication, August 28, 2006) claims, offering a program made by MTV Networks might not go against localization strategy, as

long as the right program is identified and aired to a particular local market.

Given a show produced by foreign MTV channels on the basis of a certain creative

idea, Varma (personal communication, August 28, 2006) also emphasizes the need to

44 Local pop music in Mandarin Chinese is the most popular genre in the Taiwanese market (S. Chang, personal communication, July 26, 2006).

136 remake the same show locally, featuring local hosts and talents, so as to make it more

relevant to local viewers. There are some ideas or formats, which work in multiple markets,

and each of local MTV channels is encouraged to apply those fundamental ideas or

concepts into their local contexts. For example, MTV Taiwan utilizes international

resources to make local content, as seen in programs that inform Taiwanese viewers about

hip-hop or international music trends (S. Chang, personal communication, July 26, 2006).

Chang (personal communication, July 26, 2006) says that they do not just offer foreign

programming on its own but have to add something to it. Another good example is a

program titled “MTV Jammed,” which features artists turning up in various places to

perform unannounced live shows and surprise audiences. This program, originally

developed by MTV Korea, is remade in various markets under the same format, featuring

different famous local artists in each market. Now as embodied in its slogan of “think

globally, act locally,” the popularity of MTV Networks around the world is attributed to the

market-driven strategy to differentiate its content around the world, localize its global

product, and incorporate local music and hosts (Philo, 1999; Price, 2002; Sutton, 2003).

Cartoon Network

Cartoon Network was once called “the exception to the localization rule” (Johnston,

1996). Early on, programming packaged for distribution to Asian audience principally came

from Turner Broadcasting’s vast animation library of more than 8,500 cartoons, including those produced under the names of Hanna-Barbera and Metro-Goldwyn-Mayer (MGM), and only about 30% was dubbed into local languages, such as Mandarin Chinese and Thai

(Johnson, 1996; McGrath, 1995; Wall Street Journal, 1994). At present, however, language customization is commonly employed by their local channels in Asia. Cartoon Network

Japan and Cartoon Network Taiwan use dubbing into Japanese and Mandarin Chinese, respectively. Cartoon Network Southeast Asia, which covers a number of Asian countries including Singapore, is offered in English but also provides dubbing for Thai and subtitles

137 for Korean. According to chief of programming and acquisitions at Cartoon Network

Asia/Pacific Michele Schofield’s definition (personal communication, August 25, 2006), localization is to make the audience realize that the channel is made for them.

The localization for Asian Cartoon Network channels is not always to show

animation produced in their home countries. For example, Cartoon Network Japan does not

especially focus content from their domestic market, Japan, which has a strong animation

production industry. Cartoon Network Japan’s programming director Shinji Suetsugu

(personal communication, March 16, 2006) claims that the channel has a wide variety of

animation fans, and Japanese animation is nothing but one option of many choices.

Likewise, hardly does Cartoon Network Southeast Asia show Singapore-made animations,

although the country today places an emphasis on animation production. Schofield

(personal communication, August 25, 2006) mentions that no Singapore-made animation

has taken her interest to acquire. Instead, the channel mainly offers animation programs

made in Europe, Canada, and the United States. Of the many animated titles Cartoon

Network Taiwan currently offers, only one title is Taiwan-made. Cartoon Network Taiwan’s

programming manager Gary Chou (personal communication, July 25, 2006) claims that localization for Cartoon Network Taiwan means showing animated programs Taiwanese audiences like. The most important consideration for Cartoon Network Taiwan’s programming decision is whether or not a program is accepted by the main target and posts high ratings (G. Chou, personal communication, July 25, 2006). For the present, Cartoon

Network Taiwan places a high value on Japanese animation in their programming. In fact, among top twenty programs by audience ratings on Cartoon Network Taiwan in June 2006, all but three were Japanese animation programs.

Meanwhile, Cartoon Network has also contributed to international co-productions,

giving more opportunities to develop and present new projects to local producers

(Television Business International, 2003). For example, Cartoon Network U.S. has some

138 plans to collaborate with Japanese partners. “The Powerpuff Girls Z” is another version of

the popular animated series “Powerpuff Girls,” which was co-produced with Japanese

production houses.45 Chou (personal communication, July 25, 2006) states, “I think

[modified] characters are really better than originals for Asian people and kids.” This

example shows that even though CNOs were made primarily under the initiative of Cartoon

Network U.S., characters can be modified to appeal to some other markets. The network’s success worldwide might in part depend on how successfully they can modify existing characters for local viewers.

ESPN

Sports-i ESPN does not show a great deal of live sports from foreign countries but,

if any, they are always accompanied with play-by-play commentary in Japanese. In a lot of

cases, the channel edits a recorded version, add Japanese commentary, and offer it at a

different time. Meanwhile, ESPN Taiwan currently provides their original programming

basically only during primetime. Other timeslots, such as morning and midnight, are filled

with programs, which are shared with other ESPN STAR Sports-owned ESPN channels and

offered exclusively in English. Such programs should be viewed as regional programs rather

than local programs on the basis of ESPN STAR Sports vice president of programming at

Southeast Asia Nick Wilkinson’s definition (personal communication, August 29, 2006) that

localization of programming requires local language commentary. From a local perspective,

ESPN STAR Sports senior manager of marketing in Taiwan Jammie Chen (personal

communication, July 24, 2006) claims that language customization, including dubbing and adding subtitles and commentary, should be done for all programs for local viewers, but it is yet to be realized.

45 The Powerpuff Girls Z debuted in Japan on July 1, 2006 on the Japanese broadcasting network TV Tokyo. It is not yet available on Cartoon Network Japan as of October 2006.

139 “Sports Center,” a popular sports news show produced by ESPN in the United States, is a good example of the remake of content by Asian ESPN channels. Localized versions of

Sports Center have been created for four Asian ESPN channels operated by ESPN STAR

Sports to make the show more relevant to local viewers (ESPN International, 2005).46

Sports Center Taiwan’s set, graphics, and music are part of global carbon copy used by

ESPN, but the sports clips and coverage are customized to fit local interests (Petrecca,

2002). Meanwhile, Sports-i ESPN still offers U.S. Sports Center with sportscasters’

comments dubbed into Japanese. Although the show is currently one of the few attractive

programs supplied by ESPN, Hase (personal communication, March 14, 2006) hopes that

Sports-i ESPN will launch their own version of Sports Center, which features more footage

of Japanese athletes and Japanese commentary.

Thanks to the purchasing power of ESPN STAR Sports, ESPN Taiwan, unlike

Sports-i ESPN in Japan, offers major U.S. professional sports, such as MLB, which are

quite popular among Taiwanese audience. To describe the acceptance of MLB in Taiwan

more precisely, however, audiences would rather watch a New York Yankees game featuring

a Taiwanese pitcher than a random MLB game. Many Asian athletes have moved from their

home countries to European or U.S. sports leagues in the past 10 years, and Taiwanese

players are no exception. Chen (personal communication, July 24, 2006) considers that the

most important thing for localization is to choose relevant games, claiming, “If a Taiwanese

player plays for some foreign team, we will try to purchase the team’s games.” Chen admits

that the international telecasts of those games would meet local viewers’ demands.

46 Yet, this statement disagrees with Wilkinson’s viewpoint (personal communication, August 29, 2006) that local versions are made because of rights issues rather than local viewers’ demand for them. According to him, “ESPN’s domestic Sports Center isn’t available for us in Asia.”

140 Discovery Channel

Discovery Asia’s programming is transmitted in English, Japanese, Bahasa Melayu,

Cantonese, Mandarin, Putonghua, Thai, and Korean (Discovery Communications Inc.,

2006a). According to Gibbons (personal communication, August 29, 2006), localization for

Discovery Channel means speaking to people in their own languages with content relevant to their cultural society. Gibbons further states, “Localization of content means that you source or create content that is immediately relevant to their marketplaces.” “Relevant” is a word, which was emphasized by Discovery Channel’s executives during interviews.

According to Discovery Japan’s president and representative director Philip Luff (personal communication, March 17, 2006), when a production has been made originally for a U.S. audience or European audience, Discovery Japan looks at that program and decides if it is relevant to Japanese audiences. Luff (personal communication, March 17, 2006) believes that all of their programming offerings are relevant to Japanese audiences, even though none of them is currently produced locally. In essence, for Discovery Channel, a program relevant to audience is not necessarily synonymous with a locally produced program.

Meanwhile, some of Discovery’s documentary programs are remade in order to adhere to values or beliefs inherent in local markets so as to avoid alienating potential local viewers. An example is a special program titled “Secrets of the Battleship Yamato,” which was co-produced by Discovery Asia and a U.S. public broadcaster. The producer made two versions of that program for two different audiences, namely American audiences and Asian audiences, considering two different viewpoints. Besides, some programs are reedited and repackaged to make them more relevant for particular local viewers. Given a program made by a foreign Discovery channel, this method allows local Discovery channels to eliminate some parts, which are considered irrelevant to local viewers, and in turn add some materials, which are more relevant to them (P. Luff, personal communication, March 17, 2006).

Furthermore, although around 70% of programming is common around the world,

141 Discovery Channel is also working toward a situation in which the remaining 30% of the programming is regionally produced or acquired. According to Gibbons (personal communication, August 29, 2006), to create or source regional content is the ultimate form of localization for Discovery Channel, because it is the most expensive thing to accomplish.

Cross case analysis

Interviewees respond to the question of how they define localization almost

identically: to make the local audience realize that the channel is made for them by offering

programming more relevant to them. In essence, the localization of television programming,

a somewhat elusive concept, is commonly recognized as choosing and presenting right

content for local viewers, and it does not always entail programming originally made or

acquired for a local channel. In fact, it seems that the concept of localization tends to be

interpreted broadly, as any programs can be viewed as being localized, if they are chosen for

and preferred by local audiences. Even though local Asian channels of Cartoon Network

and Discovery Channel do not produce their own original programs much, they regard

much of their programming as being localized on the grounds that they usually choose

programs by taking local preferences into consideration. The localization of television programming, therefore, conceptually means an approach of reflecting the relevance to local markets as well as the needs of local target audiences. This perspective is particularly important in the process of programming selection for individual markets.

In practice, however, the local adaptation of television programming actually takes

several forms in the production process. First, it is usually accompanied by language

customization or other linguistic localization of television programs made in overseas

countries. Asian MTV channels offer programming basically in their local languages.

Cartoon Network and Discovery Channel are customized to local languages in Japan and

Taiwan, whereas their Southeast Asia channels are provided with multiple language

soundtracks or subtitles. Yet, on local channels of ESPN STAR Sports, such as ESPN

142 Taiwan and ESPN Asia, sport programming during non-primetime is offered only in English,

although more or less viewers in markets covered by those channels do not understand

English.

Local adaptation of television programming presupposes language customization but

might go far beyond it. Some local teams utilize content supplied by the network as part of a

locally produced program through, for example, the partial insertion of network materials.

For instance, local MTV channels reedit music programs supplied by the network and incorporate them into locally produced programs. In a similar way, Discovery Asia occasionally repackages documentary programs originally made by foreign Discovery channels, removing anything that they did not consider appropriate for Asian audiences. At this level of local adaptation, networks do not need to change the whole network content but pick the right topics or adjust the perspective so as to be compatible with local cultural values. As discussed later in association with product characteristics, the feasibility of this

localization pattern might in part depend on the format of programming each network

offers.

Meanwhile, the full remake of network programs is done quite actively. Programs

originally produced by networks are modified to feature local hosts or characters for local

audience, while the original idea and concept are basically kept unchanged. MTV’s reality

shows and ESPN’s sports news are good examples of how well an excellent programming

idea can be shared within a network and revised at a local level. Similar approaches are also

employed by Cartoon Network, which modified characters of their animated series to cater

more suitably to local tastes.

Finally, the ultimate form of localization is to develop and produce a completely

original program based on an original idea for the specific local market. At present, this is

done by MTV’s local teams and, to a lesser extent, by ESPN’s local teams. Figure 5-1

143 illustrates the continuum of localization adaptation process for television programming,

ranging from the conceptual phase to the practical phase.

Product Characteristics

The literature review suggested that the feasibility of product standardization or

adaptation would vary with the nature of the product, in particular with its cultural

sensitivity. In order to address RQ3, how characteristics inherent in the television

programming could influence the programming strategy is analyzed below.

Cultural Sensitivity/Universal Appeal

The necessity for local adaptation of product could be influenced significantly and

positively by cultural specificity of the product. Products that are highly culture-bound, including media content, are generally considered difficult to market globally. Nonetheless, it is also possible that the cultural sensitivity of each television program could vary depending on program types and genres. Besides, some programming products might meet a universal need and hence require little adaptation across markets.

MTV

Varma (personal communication, August 28, 2006) presumes that music could

transcend national boundaries with relative ease, since listeners do not necessarily need to

understand what an artist says. If they like the beat of the music, they can still appreciate the

song. In contrast, Chang (personal communication, July 26, 2006) considers that music

programming usually does not travel well because of the difference in culture between countries. Artists show themselves on music programs or music videos. Then, local audience might feel something strange with foreign artists’ appearance and costume, which he or she might not be aware of when listening their songs on the radio or CDs (S. Chang,

personal communication, July 26, 2006).

Meanwhile, it is perhaps true that artists with worldwide fame and hence music programs featuring them could become successful on a global scale. MTV’s VMA show,

144 featuring internationally known artists, is well accepted in Taiwan because of their

worldwide popularity (S. Chang, personal communication, July 26, 2006). Togawa

(personal communication, March 15, 2006) believes that the VMA show certainly has a

universal appeal. Yet, the show might be an exceptional program, as Varma (personal

communication, August 28, 2006) views it as the only music show that has the opportunity

to achieve worldwide success.

In terms of reality shows, while believing that some shows produced by MTV U.S.

have groundbreaking formats, Varma (personal communication, August 28, 2006) considers

it difficult to create a show that will be successful in multiple markets, pointing out that an

MTV show is usually produced for a singular market. The key to success for reality shows

would be in a large part dependent on how realistic the way characters react appears to

viewers and how easily viewers can feel sympathy for the characters (Oba, 2005). Hence, it

might be true that many Asian viewers cannot easily identify themselves with characters in

reality shows produced by MTV U.S. Sasamoto (personal communication, March 15, 2006)

claims that MTV Japan is looking for material that their target viewers can integrate into

their lifestyle. For this purpose, as described earlier, reality shows made by foreign MTVs

are sometimes remade in the local context.

Cartoon Network

Schofield (personal communication, August 25, 2006) and Chou (personal

communication, July 25, 2006) agree on the ability of animated programming to transcend

national borders easily relative to other types of programming. It is not difficult for many

viewers including children to understand a storyline in animations, since universal themes and topics are oftentimes featured in animated programs (G. Chou, personal communication,

July 25, 2006). Additionally, animation is easier to be dubbed. Cartoon Network used to

also show live action shows, but they did not become successful in overseas markets,

because once they were dubbed into local languages, viewers can see human lips moving in

145 a different sync to the actual dialogue (M. Schofield, personal communication, August 25,

2006). Betty Cohen, former president of Cartoon Network International, said that dubbing made audience feel like an animated film was from the home country (Mifflin, 1995). In fact, it is often the case that viewers are not aware that a given animated program was originally made in a foreign country.

Certainly, animated programming might be one of most universally accepted programming genres, as seen in the worldwide popularity of both Disney’s animation and

Japanese animation, which is also well known as simply “anime.” Then, it is reasonable for

Cartoon Network to make efforts to develop original animations, which can be comparable to Disney or some Japanese animation in terms of universal appeal, and distributes the series worldwide. In fact, the network has put in a sufficient amount of investment into original programming, such as the Powerpuff Girls, to boost its ratings in recent years

(Winslow, 2001). Schofield (personal communication, August 25, 2006) believes that although CNOs used to be produced for U.S. audiences and simply exported to other markets in the past, they, unlike many of MTV’s network programs, have recently been made more from an international perspective. Chou (personal communication, July 25,

2006) considers it possible to develop animated programming, which can be popular all over the world.

On the other hand, however, Chou (personal communication, July 25, 2006) also suggests that many CNOs are still made on the basis of American perspectives, and actually many people complain that many of CNOs still have a distinctly American style. As discussed later, some animated programs can cause cultural disconnect to viewers in foreign countries because of unfamiliar settings, dialogues, and characters’ appearances featured in the programs. Schofield (personal communication, August 25, 2006) acknowledges that some animated titles based on dialogues are harder to work in the non-English speaking markets. In essence, as Cartoon Network Japan’s associate director of public relations

146 Michiko Hashida (personal communication, March 16, 2006) presumes, it is likely that each

country has different tastes for animated programs, and this is largely rooted in culture.

ESPN

On the international level, certain sporting events have long demonstrated an ability

to cut across boundaries of language and culture (Bellamy, 1998). A good example would be the Olympics, which arouse passion in people around the world every four years. When watching foreign sports events, viewers might hardly feel the language barrier, since they usually pay attention to how athletes play but not what athletes say. Thus, a notable characteristic of sportscast is that its appeal is determined largely by the play of athletes and

the game itself rather than by the ability of producers or directors. In consequence,

compared to other types of programming such as dramas, sports programming might

possibly be less culturally sensitive. Chen (personal communication, July 24, 2006) and

Hase (personal communication, March 14, 2006) agree that sports programming is able to

transcend national borders.

However, sports include a broad array of genres. It is likely that a certain sport,

which is quite popular in a country or region, is not accepted well in another country or region. For example, American football, far and away the most popular sport in the United

States, does not always boast the same popularity in most Asian countries. Wilkinson

(personal communication, August 29, 2006) assumes that soccer and, to a lesser degree, golf and tennis are probably the only sports that have appeal in most markets around the world.

Tastes for sports basically vary from country to country and region to region.

Hase (personal communication, March 14, 2006) assumes that the existence of

transnational superstars influences the acceptance of certain sports leagues worldwide. In

Taiwan, viewers like to watch the National Basketball Association (NBA) where there are

no Taiwanese players for the present. Chen (personal communication, July 24, 2006)

attributes the popularity of the NBA in Taiwan partly to the popularity of basketball in

147 Taiwan and partly to the fact that audiences like to see the handful of top players with incredible skills, such as Kobe Bryant or Kevin Garnett. The telecast of foreign sporting events featuring athletes of worldwide recognition could appeal universally.

Wilkinson (personal communication, August 29, 2006) thinks that sports news, such

as ESPN’s famous Sports Center, would resonate throughout the world. Yet, Chen (personal

communication, July 24, 2006) asserts, “It cannot work if we just put American Sports

Center here.” Although it is true that the U.S. Sports Center features many internationally

renowned athletes, Taiwanese viewers like to watch local sports news (J. Chen, personal

communication, July 24, 2006). According to Hase (personal communication, March 14,

2006), news about MLB without mention of Japanese players is not accepted well in Japan.

Discovery Channel

Gibbons (personal communication, August 29, 2006) believes that documentary

programming can be culturally neutral, since it usually portrays the world relevant to

everyone and is less deeply rooted in one culture, perhaps as well as news. According to

Judith McHale, president and CEO of Discovery Communications, the network has tried to

develop products appealing to every person in the world (Haley, 2005). Showing universally

appearing topics is actually a key concept underlying Discovery’s programming strategy.

Gibbons (personal communication, August 29, 2006) claims that the appeal of Discovery

Channel is universal, since a significant number of viewers are clearly interested in seeing

what is going on beyond their country across a wide range of topics. Topics that have global

resonance typically include space exploration, science and technology, ecological issues,

wildlife, world culture and history, ancient civilizations, and Dinosaurs evolution (J.

Gibbons, personal communication, August 29, 2006). Given the issues of global interest,

which could captivate a worldwide audience, it makes sense for Discovery Channel to offer

programs featuring those issues as their network programs.

148 Yet, whether or not a documentary program has universal appeal might depend on topics. In fact, Discovery Channel’s CEO John Hendricks suggests, “It is not easy to produce a documentary program that will catch audiences worldwide. People in each country have different interests. We thus adjust programs to focus on the themes that are more interesting to one country or region than another” (Sricharatchanya, 1999). Besides, it might be true that a documentary program made in a given country reflects a certain point of view indigenous to that country. Gibbons (personal communication, August 29, 2006) does not deny that some documentaries made in the United States would reflect a U.S. viewpoint. In this regard, Discovery Channel’s CEO John Hendricks once pointed out,

“Many people think that our programs come from Western points of view and may not suit people in other parts of the world” (Sricharatchanya, 1999). It is generally supposed that audiences are less interested in watching programs made from another country’s perspective

(P. Luff, personal communication, March 17, 2006).

Cross case analysis

It is interesting that many executives and managers believed that the program type their networks are specialized in (e.g., music, animation, etc.) basically has an intrinsic power to transcend national boundaries more easily than other program types. It is perhaps true that such genres as music, animation, sports, and documentary commonly have a characteristic that is relatively easily understood in different cultural context. This is because the appeal of music and sports programming is largely not based on dialogues, and animation and documentary programs often feature universal themes and topics familiar to a number of people around the world. Yet, because those program types are less culturally sensitive does not mean that foreign-made programs of those genres are preferred by local audiences. While the understanding of content is obviously a necessary condition for the preference of content, both are not synonymous with each other. For instance, while popular music might be relatively easily understood in different cultural context, it is still likely that

149 music preference is basically local (de Mooij, 2004). For this reason, the importance of

programming reflecting local preferences was underscored by all interviewees.

It is true that many of network programs distributed on a global basis are still made in the United States. The question is whether those programs are produced to intentionally

target a worldwide audience, or they are to be targeted at viewers in a specific market, i.e.,

the United States, initially and then to be distributed to other markets. MTV’s Varma

(personal communication, August 28, 2006) assumes that every show is basically produced

for a particular market. Although Cartoon Network’s original animation series and many of

Discovery’s documentaries are believed to be produced from global perspectives so as to be

accepted in markets all over the world, it is still uncertain if such production is really

possible. It might be inevitable for a given program to reflect a producer’s viewpoint, which

is rooted in his or her cultural value, even with inputs from foreign affiliates.

Meanwhile, it is in general considered that certain artists, animated characters,

athletes and their games, and social events can draw global interest, and hence programs

featuring them will appeal to viewers around the world or at least in multiple markets. For

instance, some internationally recognizable artists featured on MTV could have universal

appeal, and some topics on Discovery Channel could have global resonance. Coupled with

the certain program’s potential to cross national borders, the appeal of those icons or topics

could be a justification of the network programs supplied on a global basis.

Production Cost and Format

Discovery Asia’s Gibbons (personal communication, August 29, 2006) ascribes the

difference in the ratio of original programming between local MTV and Discovery channels

to the difference in production costs typical for both program types. Similarly, ESPN

Taiwan’s Chen (personal communication, July 24, 2006), who used to work for MTV,

assumes that what enables MTV channels to produce a number of local programs are the

relatively small costs required for productions. In contrast, it might be substantially difficult

150 for Cartoon Network and Discovery Channel to produce an original program for an

individual local market, because of relatively high costs of production.

Moreover, music programming, or more precisely “back-to-back” music video

programming, might be among the most suitable formats for the localization strategy, since

both domestic and international music material can be packaged together in a single program. A music program usually consists of multiple songs, whether music video clips or songs from a live concert. MTV Japan actually has the technique to edit foreign MTV’s

material and incorporating it into their original content (T. Togawa, personal communication,

March 15, 2006). This is also entirely feasible for a documentary program compiled of

several stories. In contrast, some other programming types, such as animations or dramas,

usually have a storyline comprising of introduction, development, turn, and conclusion and

therefore should be presented as the whole story to fully entertain viewers. Once an

animated program has been made, it might be difficult to cut a segment from the program and insert it to another program. The programming format typically seen in Cartoon

Network, therefore, could prevent their local teams from re-editing content for local programs.

RQ3 asks how the programming strategy by the U.S.-originated cable networks

could be as a function of the nature of the programming product. Although television

program’s appeal would usually vary according to markets, some have a characteristic

appealing universally. In addition, program type might be a factor to determine

programming strategy, since different program types possibly have different levels of

cultural sensitivity. It is also possible that the program type could be the factor on the

grounds that costs for producing local programming and typical formats differ depending on the type.

151 Target Market Segment

The international success of a certain television program depends on the presence of intermarket target segments across national markets, which have the same programming preferences. The networks, therefore, might seek similarities between markets to identify opportunities to offer programming internationally. Then, the questions in regard to RQ4 are whether intermarket audience segments really exist for certain programming products and, if any, how the existence could influence programming strategies.

MTV

MTV, as the “voice of youth culture,” once believed the global appeal of its main

product, pop music programming, to the segment that seemed to share youthful and

consumerist lifestyle (Banks, 1996; Philo, 1999). When MTV began expanding into foreign

markets, it was expected that the network’s ambition to build the global rock & roll village

could be carried out by identifying and targeting teenagers living outside the United States

with cutting-edge Western pop music. MTV may commonly display the signs of global teen

culture of consumption for youth items (Walker, 1996). Recall an early discussion regarding

the global teenage segment, which is supposed to have homogeneous desire for novelty and

trendy designs and image and can be targeted globally by certain types of products.

Certainly, there still seem to exist more or less “foreign music lovers” in each

country. From finding names like Britney Spears and Avril Lavigne on questionnaires about favorite artists among Japanese youth, Togawa (personal communications, March 15, 2006) infers that probably a number of viewers have at least a partial interest in Western or foreign artists. MTV Japan’s main focus is adding fans of local music to their viewers without alienating Western music fans (T. Togawa, personal communication, March 15, 2006).

Varma (personal communication, August 28, 2006) supposes that there are audiences around the Asia region, who look at MTV for international programming, whether it is music or talk show programming. Yet, according to Sasamoto (personal communication,

152 March 15, 2006), the share of the market that wants to see MTV’s network programs in

Japan is probably about 10%.

Cartoon Network

Cartoon Network’s core audience is young children, who do not usually care about where an animated program was originally made when they watch it (G. Chou, personal communication, July 25, 2006; S. Suetsugu, personal communication, March 16, 2006). In particular, preschoolers do not have obvious taste for animation from a particular country. In fact, when Cartoon Network heavily relied on Turner’s collection of cartoons in their start up, those cartoons were believed to be well known and liked by children around the world, as former president of Cartoon Network International Betty Cohen claimed that it already had worldwide appeal (Mifflin, 1995).

Besides, some animation programs are popular among parents who want to ensure

an educational dimension of their child’s viewing, i.e., that of language learning (M.

Schofield, personal communication, August 25, 2006; Television Business International,

2004). Many parents in Asia focus very much on education. There is a clear preference for

English in some Asian countries, even though local languages are provided as an option

through local audio tracks or subtitles. Japanese viewers often associate Cartoon Network

with foreign and bilingual content (M. Hashida, personal communication, March 16, 2006).

Consequently, Hashida (personal communication, March 16, 2006) assumes, “Quite a lot of parents want to familiarize their children with English while watching fun programs.” For this reason, Cartoon Network Japan chooses famous and highly-regarded animated

programs from various countries for their preschool-age audience. The situation is the same

in Taiwan where most of animated programs for preschoolers are from the West.

ESPN

According to Sports-i ESPN’s Hase (personal communication, March 14, 2006), not

only do some Japanese viewers want to see domestic sports but have a certain amount of

153 interest in foreign sports. Viewers in Southeast Asia have interest in best plays chosen from

all over the world rather than local games (N. Wilkinson, personal communication, August

29, 2006). These imply the existence of intermarket audience segments for sports

programming.

Discovery Channel

As Discovery Japan’s Luff (personal communication, March 17, 2006) claims, it

could be often the case that audiences in different countries are interested in the same topic

for various reasons. It, therefore, should be possible to reach Discovery’s co-viewers around

the world in certain cases with the same program (J. Gibbons, personal communication,

August 29, 2006). Because their target audience commonly seeks information about the

world and an insight into its events, Discovery’s documentary programming can be more

global in focus than other types of programming (P. Luff, personal communication, March

17, 2006).

Cross case analysis

Many executives and managers of U.S.-originated cable networks suppose that there

are viewers who like international content in Asian markets. The presence of intermarket

audience segments across countries could possibly motivate those networks to distribute the

same programs worldwide. Nonetheless, the success of global programming product

depends not only on the presence of the segments at which a global television network can

target its programming products but also on the size of the segments and the strength of the segment’s preference for the global product, as suggested by the international marketing

literature. Presumably, Discovery Channel and Cartoon Network have a sufficient volume

of intermarket audience segments to target, allowing the networks to distribute more

programming worldwide. Yet, MTV might consider it more profitable to offer different

programming products for each market rather than to count on audiences across national

boundaries in aggregate and offer the same programming on a global basis.

154 Country’s Cultural Characteristics

Television programming product is cultural product whose appeal varies by national

taste, and local audiences’ tastes are considered to be in large part rooted in their cultures.

RQ5 addresses how cultural similarities and differences between markets could influence

the programming strategy of U.S.-originated cable networks.

MTV

As a general rule, all MTV channels should be programmed based on what the

audience wants, needs, and knows (M. Varma, personal communication, August 28, 2006).

Sasamoto (personal communication, March 15, 2006) claims that programming that reflects

audience needs is paramount, and Chang (personal communication, July 26, 2006) says,

“The judgment [to choose content] is whether this content would be preferred by our target

audience.” Thus, music programming in local markets should reflect a specific music

preference among local viewers. Sample markets for the current study have different

preferences for music genre: Japanese viewers tend to have a preference for hip-hop and

rock (T. Togawa, personal communication, March 15, 2006), Taiwanese viewers for local

pop music (S. Chang, personal communication, July 26, 2006), and Singaporean viewers for

foreign pop music (M. Varma, personal communication, August 28, 2006). Then, it is

reasonable for each of local MTV channels to attempt to produce music programming

featuring music genre preferred in their local markets.

Meanwhile, U.S. MTV-made programs are in general not well accepted by local

viewers in some Asian markets. MTV Japan and MTV Taiwan feel that only a handful out

of many programs currently made by MTV U.S. can satisfy their domestic target audience.

Chang (personal communication, July 26, 2006) claims that Taiwanese viewers, especially those in their teens, do not care much for American programs. Yet, the situation differs in

Singapore. Varma (personal communication, August 28, 2006) ascribes the high popularity of foreign programming in Singapore to the fact that the country is very cosmopolitan, and

155 most youth speak English and are eager to know what is happening elsewhere.47 The degree

to which MTV’s network program is accepted is in part dependent on the characteristics of

people and culture in each national market.

Although what has been discussed so far is mainly about the programming supply

from MTV U.S. to Asian MTV channels, it is also true that Asian MTV channels have

increasingly shared programming within the region. The success of programming shared at

the region level can be in part explained by cultural similarity among markets, which

provides a favorable context for the international trade in television programming. It is

pointed out that Taiwan has developed its own very vibrant music industry but also looks to

Japan for much of its music and fashion (Television Asia, 2000). Indeed, MTV Taiwan

sometimes offers programs originally made by MTV Japan. In contrast, there does not seem

to be such a significant market for other Asian artists in Japan, since Japanese viewers do

not seem to have much interest in them (T. Togawa, personal communication, March 15,

2006). Meanwhile, many programs produced by MTV Taiwan are supplied to MTV SAM, since a lot of artists who play on MTV Taiwan are also very popular in Singapore (M.

Varma, personal communication, August 28, 2006). The programming flow within Asian

MTV channels would basically depend on whether or not artists or music of a particular

Asian country is popular in another Asian country, mirroring the relationship between

American artists and demand for programs featuring them in foreign markets. According to

Chang (personal communication, July 26, 2006), MTV China, unlike MTV Taiwan, is not

eager to receive MTV Japan’s programming, because in general Japanese songs are not well

known in China.

47 Shows produced by MTV U.S. also rate very well in the Philippines, where viewers are very westernized and look to the United States for music and fashion (Television Asia, 2000).

156 Cartoon Network

Although animated programming might be one of most universally accepted

programming genres, cultural differences between countries could affect the acceptance of

animation in varying degrees. As for the acceptance of the U.S.-made animation by local

audiences, Asian Cartoon Network channels have contrasting viewpoints. Schofield

(personal communication, August 25, 2006) infers from high ratings garnered by American

animation in Singapore that it works quite well there, ascribing the success to a bigger

presence of English and more westernized lives in Singapore. Suetsugu (personal

communication, March 16, 2006) believes that many Japanese viewers do not have any

specific preference for either foreign or Japanese animation (S. Suetsugu, personal

communication, March 16, 2006). There are viewers who enjoy domestic content in Japan,

but they do not feel alienated by American content. Suetsugu (personal communication,

March 16, 2006) assumes that Japanese audiences would feel little discomfort with the

Western animation, since the Japanese lifestyle becomes more westernized, suggesting that

there would be few concepts in the Western animation, which might be difficult to

understand.

While agreeing that it is in general not difficult for viewers to understand animation,

Chou (personal communication, July 25, 2006) also points out that Taiwanese children

would get confused when they watch American traditional practices unfamiliar to them,

such as Halloween or Thanksgiving Day, or when they hear American jokes. For example,

“The Grim Adventures of Billy and Mandy” is a series about kids being friends with the

Grim Reaper. According to Schofield (personal communication, August 25, 2006), many

Taiwanese viewers, who are superstitious and have personal affinity with death and ghosts,

did not like the concept much. While kids may be more curious about what they do not

know or imaginative situations in general, it is also likely that they need some kind of realistic hook (M. Schofield, personal communication, August 25, 2006).

157 In terms of dialogues, those featured in a show, “Bobobo-bo Bo-bobo,” are

considered interesting and funny by Cartoon Network U.S., but Chou (personal communication, July 25, 2006) thinks that they are too strong for Taiwanese children.

CNOs are largely based on comedy, and this is where disconnect occurs, since this sort of

programs is more dialogue-based rather than action-based and, therefore, is harder to

appreciate in non-English speaking markets (M. Schofield, personal communication, August

25, 2006). Furthermore, Chou (personal communication, July 25, 2006) also considers it

difficult for Asian kids to get used to the fast-paced speech of U.S. animated programs’

characters. Although Cartoon Network Taiwan dubs all foreign shows into Mandarin

Chinese, dubbing might not be able to help Taiwanese children to dispel their worries,

because it basically has to keep pace with the original tempo (G. Chou, personal

communication, July 25, 2006). Problems pointed out by Chou appear to arise in large part

from cultural differences between Taiwan and the United States. Meanwhile, Chou

(personal communication, July 25, 2006) assumes that Taiwanese children are very familiar

with Japanese culture, and when watching Japanese animation, they do not face as much

difficulty as they often feel when watching U.S. or Western animation.

The appearance of characters featured in animation programs could have as much an

impact as storylines on whether or not viewers like the programs. In fact, Suetsugu

(personal communication, March 16, 2006) states that young children are attached more by

the look of the program than the plot. According to Chou (personal communication, July 25,

2006), characters of U.S. animation sometimes look strange to Taiwanese children who like

cute and lovely characters. Richard Cunningham, Nickelodeon Asia’s senior vice president,

suggests, “We have also found out that kids like to see themselves on television, so we try to

include many Asian or local faces on the channel” (Indiatelevision.com, 2003).

158 ESPN

It is quite probable that the popularity of a certain sport in a country would be a

prerequisite for the popularity of programming showing the sport in the country. If tastes for

sports vary from country to country and region to region, sports programming might

basically be a business based on a local and regional appeal. When ESPN began catering to

prevalent taste in Asia, ESPN International’s former senior vice president and general

manager Andrew Brilliant once said, “Our objective is to become an Asian service, not an

American export service” (Goll, 1993). It is, nonetheless, still difficult to have maximum

appeal across countries in Asia with a sport program, since each Asian country has different

taste for sports. For instance, cricket is a very popular sport in India, but only a few

Japanese or Taiwanese are familiar with the sport. Different tastes for sports are also found

even between Japanese and Taiwanese people, as soccer is popular in Japan but not in

Taiwan, and the opposite is the case for basketball. Ideally, therefore, each ESPN channel

should be dedicated to a specific market based on viewers’ preferences in the market. If no

two markets are alike in terms of audience preferences for sports, understanding and

accommodating local tastes is critical in successful sports programming.

Aside from some indigenous sports (e.g., sumo wrestling in Japan), many sports

currently popular in Asia were originally imported from the West (I. Hase, personal communication, March 14, 2006; J. Chen, personal communication, July 24, 2006). It is possible that the sporting tastes of Asian people have been in large part formed under the influence of Western countries. Pointing out the fact that Japanese learned baseball from the

United States and soccer from Europe, Hase (personal communication, March 14, 2006) presumes that Japanese taste for sports is a blend of both American and European influences.

According to Chen (personal communication, July 24, 2006), Taiwanese imported a lot of things, including sports, from the United States, and consequently Taiwanese tastes came to

reflect American tastes, as evidenced by both countries’ fondness for baseball and basketball.

159 The prominently popular sport in Singapore is soccer and, among others, English soccer.

Wilkinson (personal communication, August 29, 2006) ascribes the popularity to the first mover advantage that English soccer has enjoyed in Singapore, an ex-British-colony. Not only have English soccer teams spent a long time touring in Singapore, but also English soccer games have been broadcast on local television networks.

Presumably, the preference for sports in a given country has cultural and historical

reasons (N. Wilkinson, personal communication, August 29, 2006). Besides, the traffic of

people between countries might have some impact on their preference for sports. The

American influence on sport tastes among Japanese and Taiwanese might be also related to

the fact that many people come and go from these countries to the United States (J. Chen,

personal communication, July 24, 2006; N. Wilkinson, personal communication, August 29,

2006). From a broader perspective, it is likely that tastes for certain sports in a given Asian

country have been nurtured in the context of bilateral relationship between that country and

a particular Western country, which has exerted its influence on the Asian country in many

aspects.

Although baseball was exported from the United States to Japan and Taiwan and

became quite popular in both countries, however, it is not true that viewers of both countries

like any baseball telecasts from the United States. As noted earlier, Chen (personal

communication, July 24, 2006) considers it important that sports programs offered by ESPN

Taiwan are relevant to Taiwanese viewers. In the case of international sports programming,

it should feature either national Taiwan teams or Taiwanese players. Hase (personal

communication, March 14, 2006) claims that the presence of famous Japanese players in

foreign sporting events has an influence on the popularity of the events. MLB and also

foreign soccer leagues became increasingly accepted by Japanese audiences, as more

Japanese players moved into these foreign sports leagues. Paradoxically, it is possible that

the unpopularity of American football in Japan is in part attributed to a fact that there are no

160 Japanese players in the National Football League (I. Hase, personal communication, March

14, 2006). In essence, the existence of domestic players is important for Taiwanese and

Japanese audiences when they watch international sports games, since they find enjoyment in watching domestic athletes playing actively in the international arena.

Yet, Wilkinson (personal communication, August 29, 2006) views these attitudes as typical in Northeast Asian viewers, in contrast with Southeast Asian viewers looking for the best rather than the local. In fact, the top rating sports programs in Singapore are all English soccer matches featuring not a single Singaporean player. ESPN Asia produces a weekly show featuring the local soccer league, the Asian Football Confederation, but it does not rate as well as the English Premier League does (N. Wilkinson, personal communication,

August 29, 2006).

Discovery Channel

It is plausible that people around the world have common interests in the universal topics featured in Discovery Channel’s programming. In the strict sense, however, whether people are interested in foreign affairs may depend on the national character to some extent.

For example, Singaporeans in general have great curiosity about the outside world (J.

Gibbons, personal communication, August 29, 2006). On the contrary, according to Luff

(personal communication, March 17, 2006), U.S. viewers probably are less interested in international topics. Additionally, the degree to which a certain topic is accepted by viewers in a country might eventually vary depending on the country’s preference. As noted earlier, history and technology are generally perceived as universally appealing topics by Discovery

Channel’s executives. Yet, the network once found that viewers in Mexico preferred programs about history and architecture, while those in China and Brazil particularly liked military technology shows (Walley, 1995). Japanese viewers in general do not like dark and terrible stories, such as those about atrocity by Saddam Hussein, which attracted worldwide attention. Luff (personal communication, March 17, 2006) assumes that these preferences

161 could be in part ascribed to Japanese culture. Obviously, each local Discovery channels has

to offer programs that are not likely to go against a country’s interest.

Documentary programming or factual programming can explore a very wide range

of topics. It is, therefore, likely that some topics do not draw global concerns but do regional or local concerns. Luff (personal communication, March 17, 2006) identifies certain topics that are of particular interest only to Asian people. An example of this is the tsunami, which may not be such a relevant topic to many Europeans or Americans but concern Asians deeply (P. Luff, personal communication, March 17, 2006). Gibbons

(personal communication, August 29, 2006) presumes that viewers do not look at whether a program is global or local but rather whether or not it matters to them. Discovery Asia produced a documentary program titled “The History of Singapore,” which was naturally very relevant to Singaporean viewers and hence delivered a high audience rating in

Singapore. Gibbons (personal communication, August 29, 2006) mentions, “As you move further away from Singapore, the ratings probably get less and less, because even though it’s a topic that’s interesting for many people around the world, it’s most interesting in its home market of Singapore.” This example might prove that audiences in general tend to prefer documentary programs specifically relevant to their home countries and, to a lesser extent, those relevant to the region, which includes their home countries, as indicated by the cultural proximity theory.

Cross case analysis

A country’s cultural characteristics could influence programming offerings by

U.S.-originated cable networks in several ways. First, it is perceived that audiences in

general prefer programs including icons familiar to them and topics relevant to and arousing

sympathy among them. Those icons and topics are often local celebrities, characters, or

stories. Many of executives and managers interviewed agreed that each market has unique preference for television programming. Although they did not necessarily refer to the

162 individual market’s unique culture as the reason behind the difference in viewing

preferences, audiences are supposed to interpret media content actively on the basis of their

cultural values, as repeatedly pointed out in the current study. It is no surprise that local

Asian channels give top priority to the taste of their target audience when making

programming decisions, as all interviewees acknowledge that their programming services

must meet demands in the market. It is important to note that programs supplied by the

network are often less popular among local audiences than local programs, which are

produced specially to cater to tastes and needs in a local market. Paradoxically, network

programs could be offered more, if they were preferred by local viewers at least as much as

local programs. In fact, Sasamoto (personal communication, March 15, 2006) claims, “If we

were able to increase the number of viewers by providing dubbed or subtitled American

MTV content, then we might raise the ratio to 30 or 40%.” Yet, the number of network

programs, which could attract local viewers, might be limited under the present situation.

Second, it is commonly believed that television viewing preferences and hence the extent a network program is accepted significantly differ from one national market to another. Executives interviewed all state that foreign-made programs would be in general accepted well in the Singaporean market. All of the major international shows are very popular in Singapore (M. Varma, personal communication, August 28, 2006); Singaporean viewers accept American cartoons to a greater degree (M. Schofield, personal communication, August 25, 2006); the interest in Singapore is in the best quality sport rather than necessarily local sport (N. Wilkinson, personal communication, August 29,

2006); and there is a huge curiosity among Singaporeans about the outside world (J.

Gibbons, personal communication, August 29, 2006). These statements can be in part associated with a multicultural and cosmopolitan nature intrinsic to many Singaporeans.

While Singaporean viewers often seek the best of the world in content, Japanese and

Taiwanese viewers tend to look for the near to them. In addition, because of a characteristic

163 of Singapore as an English-speaking country, network programs, in particular those based

on dialogues in English, would be more acceptable in Singapore than in Japan and Taiwan.

Third, given a fact that many network programs are still made in the United States, they could be more successful in countries in which national cultural values are similar to those of the United States on the one hand. On the other hand, some Asian countries share similar cultural values between them, whereby programs could be distributed more actively on a regional basis. In fact, MTV Networks Asia distributes some programs within their local Asian channels, while Discovery Asia attempts to produce documentary programs, which commonly appeal to Asian markets. In a sense, regional programming might be viewed as the middle-of-road programming policy between network programming and local programming. It may be possible that many Asian viewers would prefer regional programming to network programming made in the United States, though it is less preferred than local programming.

Country’s Environmental Characteristics

In addition to cultural characteristics, environmental characteristics of a country are

assumed to have an impact on product offerings as well. The international marketing

literature roughly identifies four types of environmental differences as important factors

affecting the direction of product standardization or adaptation: economic,

physical/geographic, legal, and infrastructure/supporting environments. Product

standardization appears feasible where those environments are most alike. RQ6 addresses

the relationship between those environmental factors and strategy employed for television

programming products.

Economic Condition

Some international marketing studies suppose that consumers in economically

similar countries would become homogeneous, providing opportunities for product

standardization. Meanwhile, as discussed in Chapter 3, the general economic condition of a

164 country could have an impact on programming strategies by U.S.-originated cable networks

in the national market. The development of a robust domestic television industry, which is

usually achieved by the economic development of a country, would eventually benefit local

television programmers to produce their own programs.

MTV

The extent MTV’s programming can contain local music and artists is related to the

availability of local music videos. Japan has the world’s second-biggest music industry in

terms of the sales of audio recordings, while the music industry in Singapore is very small,

as only 10 or 15 artists singing in Mandarin release albums (M. Varma, personal

communication, August 28, 2006). There is a big difference in the availability of local

music videos between MTV Japan and MTV SAM.

Cartoon Network

Domestic animation production houses might play an essential part in Cartoon

Network’s local programming. The Taiwanese animation industry currently does not produce a sufficient amount of animated content, and thus Cartoon Network Taiwan has

physically no choice but to rely on foreign-made animation to fill their schedule.

Discovery Channel

Only a few Asian countries might have strong documentary film industries with

sufficient volumes of archives. A challenge faced by documentary channels in Asia might be

to find sufficient quantities of high-quality programming in domestic markets to fill the

schedule (Westcott, 1999).

Cross case analysis

There is no data to support that television audiences in economically similar

countries have similar viewing preferences. For instance, although Singapore and Taiwan

have similar GDP per capita (see Table 4-3), viewers in both countries would basically have

different tastes for television programming, as discussed so far. It seems unfeasible that the

165 same programming product is accepted in countries for the reason alone that viewers in the countries have a similar economic level.

Meanwhile, the combination of a large population with wealth, which could be indicated by a high per capita income, in a country is deemed as a contributor to the high self-sufficiency ratio of television programming at home, as the combination makes the country a big market for television programs. As some interviewees point out, Singapore does not have a television production industry as large and mature as those of Japan and

Taiwan. Singapore is certainly a rich country, whose GDP per capita in 2005 was U.S.

$27,600. However, in terms of population, Singapore is about one fifth of Taiwan and one twenty-eighth of Japan (see Table 4-3). Under such circumstances, it might be substantially difficult for programmers to produce or acquire a sufficient volume of local programs in the domestic market, and instead foreign-made programs might be sought inevitably as a substitute of domestic programs to fill programming schedules. In fact, U.S.-originated cable networks might not have incentives to produce a number of local programs for the

Singaporean viewers, let alone provide dedicated channels for the market. In a broad sense, this could be interpreted as the influence of the domestic economic size on television programming strategies.

Physical/Geographic Condition

It was suggested by the international marketing literature that differences in such physical conditions as climate and topography among countries would require firms to modify products to accommodate to different environments. For example, U.S. electrical appliances manufacturers might have to modify the size and function of their products for the residential environment and climate in overseas markets. In addition, the geographic condition could influence what product is offered in an individual market. In fact, as described in Chapter 3, the geographic region has increasingly played a pivotal role in the development of global television networks, which usually regard each region as a unit for

166 their overseas operations. It is possible that global television networks try to exploit an

opportunity to offer the same programming on a regional basis.

MTV

It is common in Asia that MTV channels in different markets conclude programming

carriage agreements with each other (Hughes, 2000a). MTV Networks Asia headquartered

in Singapore sometimes distributes content throughout Asia. Yet, it is noteworthy that there

is a clear distinction between the role of programming supplier and that of programming receiver even among Asian MTV channels. For example, as noted previously, MTV Taiwan often features Japanese programming, while MTV Japan rarely offers other Asian programming. At the same time, MTV Taiwan, as the main producer of content in Mandarin

Chinese, currently supplies several shows to MTV China, although they focus only on the

need of the Taiwanese viewers and do not necessarily take into consideration the preference

of Chinese viewers when developing programming products (S. Chang, personal

communication, July 26, 2006).

Cartoon Network

Cartoon Network Asia/Pacific tries to have their own productions in the Asia region.

In order to produce their originals at a regional level, they look to such Asian markets with a

relatively strong production capability as India and Korea (M. Schofield, personal

communication, August 25, 2006). Besides, the regional headquarters purchases some third

party titles to show on several local channels in Asia (G. Chou, personal communication,

July 25, 2006; M. Hashida, personal communication, March 16, 2006).

ESPN

ESPN STAR Sports purchases sports rights on a regional basis for their own

channels, such as ESPN Taiwan and ESPN Asia. As a consequence, a certain amount of

sports programming on those channels is identical. Yet, Sports-i ESPN does not share any

programs with ESPN STAR Sports, since the broadcast rights held by them are restricted to

167 the Japanese market, and they usually do not retain broadcast rights for other Asian

countries (I. Hase, personal communication, March 14, 2006).

Discovery Channel

Discovery Channel in principle operates on a regional basis. Local Asian channels,

such as Discovery Japan, Discovery Taiwan, and Discovery Southeast Asia, are all

programmed and distributed from Discovery Asia’s headquarters in Singapore. In

contradiction of Discovery Asia’s former senior vice president and general manager Kevin

McIntyre’s assertion that they had no pan-Asian ambitions (Dhar, 1995), Discovery Asia in

fact tries to come up with a common format that would work for the whole region and already produces more than 10% of its content within the Asia region (Bowman,

2003/2004). They are committed to producing or to co-producing documentary programs in the region. For example, “The Asian Masterpiece Series” is Discovery Asia’s initiative making use of the talents of the best directors in Asia to produce original stories about Asian culture, places, and people (Discovery Communications Inc., 2006b).

Cross case analysis

The influence of physical condition of a market on the programming strategies

might be minimal. Differences in climatic and topographic conditions would have little

impact on television programming strategies, as it is unlikely for U.S.-originated cable

networks to modify their network programs to fit in foreign residential environment and

climate. Meanwhile, the influence of geographic proximity on programming is seen in a fact

that local Asian channels in geographically proximate markets sometimes share the same

programming. Yet, what drives the regionalization of television programming might be

cultural proximity between Asian markets, which results in similar viewing preferences. In

addition, the degree to which a program can be distributed within the Asia region is also

likely to hinge on how much autonomy to decide programming is given to Asian regional

headquarters from corporate headquarters of the network, since the regional programming

168 perhaps requires the coordination by the regional headquarters. Asian affiliates of

U.S.-originated cable networks, namely MTV Networks Asia, Cartoon Network

Asia/Pacific, ESPN STAR Sports, and Discovery Asia, could have an economic incentive to

distribute the same programming they produced or acquired to channels they own and

operate in the Asia region, but it might vary among networks if the regional headquarters is

given discretion in programming. This point is discussed later.

Legal Environment

As products have to be modified so as to conform to the legal requirements of

overseas markets, legal requirements in individual markets, if any, could influence what

programs are offered in those markets. Those regulations are roughly twofold: Quotas

imposed on cable networks in terms of their importation of foreign content are quantitative

regulations, while censorships imposed on content are qualitative regulations.

MTV

There are no specific quotas that require a certain percentage of the programming schedule to be filled with locally produced material both in Singapore and Japan.

Meanwhile, Taiwan’s Cable Television Act specifies that foreign programming should be no more than 80% of programming. Yet, this rule is not valid for cable channels owned by foreign companies, such as MTV Networks Asia. The amount of foreign-made programs on

MTV Taiwan is restricted to less than 50% of programming (S.Chang, personal communication, July 26, 2006).

Cartoon Network

Cartoon Network does not face maximum amount limits in any Asian countries in

terms of restrictions on the amount of foreign-made programs and hence are allowed to

offer as much foreign programming as they like. Meanwhile, Cartoon Network Taiwan is

encouraged by the Taiwanese government to work actively with local production houses to

increase the amount of domestically made animations. In terms of regulations of content,

169 Cartoon Network Taiwan is officially banned from showing drug-use, sexual, or violent

content even in the midnight (G. Chou, personal communication, July 25, 2006).

ESPN

As there are no restrictions on the amount of foreign programming in Japan, Sports-i

ESPN, if they want to, could have all foreign-made content. Yet, Hase (personal communication, March 14, 2006) thinks that it has no significant effect on their programming strategies. It seems that the regulation of sports content differs from one country to another. ESPN Taiwan is forbidden to show bloody professional wrestling shows.

On the other hand, fighting sports including “World Wrestling Entertainment,” which often contains bloody match-ups, are offered by Sports-i ESPN and gain popularity among audiences. Besides, programming, which could tempt viewers to gamble, such as the telecast of horse or dog races, can be offered by ESPN Asia but not by ESPN Taiwan before

9 pm.

Discovery Channel

Discovery Japan does not face any particular regulation in terms of the amount of

programs made in foreign countries. According to Luff (personal communication, March 17,

2006), no regulation bans them from presenting any particular topics and images in Japan.

Cross case analysis

It is difficult to conclude how legal regulations influence the programming strategies

of U.S.-originated cable networks, since there are few requirements to abide by in such

markets as Japan and Singapore. As noted earlier, Japan and Singapore do not have specific

quotas that require a certain percentage of the programming schedule to be filled with

locally produced material. Taiwan has an import quota, which limits the amount of foreign

television programs offered by certain cable channels, such as MTV Taiwan.

In general, the content quota restrictions for foreign-owned cable channels in Asia

are not as severe as those for broadcast networks. Presumably, governments in many

170 countries understand that it is virtually impossible for animation or documentary channels in their countries to fill their programming only with locally made content. Overall, it is perceived that official regulations, whether quotas or censorships, currently do not have much impact on programming strategies by U.S.-originated cable networks in such Asian markets as Japan, Taiwan, or Singapore.

Infrastructure/Supporting Sector

According to the international marketing literature, similar marketing infrastructures

between countries as well as the availability of global marketing infrastructure could

facilitate global standardization strategies. The absence of such infrastructures would

encourage a more localized product strategy. Furthermore, supporting sectors, including

advertisers and MVPD systems, are also essential for cable networks, since most of the networks receive dual revenues from both parties. Those revenues can eventually influence production budgets that cable networks capitalize on for programming.

MTV

High percentage of local programming by MTV Japan and MTV Taiwan could be in

part facilitated by their strong self-production capabilities, assisted by advertisers.

According to Sasamoto (personal communication, March 15, 2006) and Chang (personal

communication, July 26, 2006), both MTV Japan and MTV Taiwan are recognized as media

reaching young consumers by domestic advertisers, which, as discussed earlier, are more important than global or regional advertisers in the contemporary multichannel landscape.

Although advertisers rarely voice their opinions concerning programming (S. Chang, personal communication, July 26, 2006), what programs are offered could influence advertising opportunities and eventually advertising revenues. Sasamoto (personal communication, March 15, 2006) claims, “There’s a limit to the advertising we can aim at viewers interested in foreign or American programming.”

171 Meanwhile, viewing MTV as being analogous with Western or foreign content,

MVPD systems request MTV Japan to offer international content so that they group music channels into foreign music or local music genres for their programming lineups (T. Togawa, personal communication, March 15, 2006; Y. Sasamoto, personal communication, March 15,

2006). Yet, MTV Japan might not abide by the order. According to Sasamoto (personal communication, March 15, 2006), “If many viewers are not interested in programs from the

West or the U.S., these will not be aired no matter how much the platforms push for Western or foreign content.”

Cartoon Network

Cartoon Network Taiwan is given much suggestion regarding programming neither from advertisers nor MVPD systems (G. Chou, personal communication, July 25, 2006).

Meanwhile, Ian Diamond, senior vice president and general manager of Turner

Entertainment Networks Asia/Pacific, asserts that a cartoon character or a show’s success is judged by how well other commercial products related to the character are accepted by the public (Lugo, 2003). Animated characters and related merchandise could complement each other. In fact, both Cartoon Network Japan and Taiwan tend to attract firms making animation-character merchandise as main advertisers, and Hashida (personal communication, March 16, 2006) perceives the trend as being directly related to content on the channel.

ESPN

Advertisers have an impact on the programming of Asian ESPN channels. Chen

(personal communication, July 24, 2006) claims that ESPN Taiwan still relies on regional programming, but a program could be produced on a local level if they find advertisers to bear all costs necessary for the program. At the same time, advertisers give input into the programs they sponsor, and programs are often made based on the input (I. Hase, personal communication, March 14, 2006). ESPN usually attracts sports brands advertising, and

172 Adidas, for instance, might expect ESPN Taiwan to feature international athletes under

contracts with them (J. Chen, personal communication, July 24, 2006). While MVPD

systems usually do not have any requests for Sports-i ESPN’s programming, ESPN Taiwan

sometimes is advised by them, who aim to increase the number of subscribers.

Discovery Channel

Discovery Japan currently has much more reliance on carriage fees from MVPD

systems than on advertising revenues. According to Luff (personal communication, March

17, 2006), some advertisers shy away from spending money on cable channels in Japan,

partly because the number of viewers are still small, and partly because there is no regular

audience ratings measured for cable channels. In the absence of audience data, advertisers

would not be willing to spend for cable channels. Meanwhile, Discovery Channel attracts

many firms, which want to advertise within the region. As noted earlier, Discovery Asia

tries to come up with a common format that would work for the whole region. The main

reason for this is the needs of advertisers who plan to roll out campaigns on a pan-regional

basis as well as the brand consistency in the region (P. Luff, personal communication,

March 17, 2006). Luff (personal communication, March 17, 2006) says that if the network

changes programming format significantly, it offers some problems for their regional

advertisers looking for solution consistent across the whole region, although Gibbons

(personal communication, August 29, 2006) declines to say whether their advertisers prefer

global or local programming.

Cross case analysis

MVPD systems offer an infrastructure for the delivery of video programs. The development of distribution infrastructure is certainly necessary for the availability of

U.S.-originated cable networks on a country basis. However, it is unclear how it could affect the networks’ programming strategies for particular national markets. In terms of the similarity of marketing infrastructure, MVPD systems in some Asian markets (e.g., Taiwan)

173 are as highly developed as those in the United States, as a result of their aggressive investments in upgrading infrastructures to allow for advanced video services. Yet, there is no evidence to support that similar infrastructures drive the same programming product to be successfully offered both in the United States and those Asian markets.

In terms of the availability of global marketing infrastructure, which could be a prerequisite for global standardization strategy, U.S.-originated cable networks leverage several satellites around the world to distribute the same programming worldwide. Physical distribution costs necessary for the delivery of television programming products are usually not expensive, as they are intangible, information goods. These conditions would support network programs to be distributed across markets.

MVPD systems may have an impact on programming strategies as revenue source rather than as infrastructure. MVPD systems and advertisers as deep pockets for programming might call on the networks to offer specific types of programming. It was assumed that most advertisers and MVPD systems would basically like programs to be locally adapted, since those programs are believed to increase the number of consumers, who are exposed to their ads or subscribe to their MVPD services. However, it is also possible that a local channel of a U.S.-originated cable network is expected to offer more international content by MVPD systems, which need to provide more focused content to cultivate niche audiences along with further audience segmentation. Meanwhile, advertisers obviously care about whether or not the programs they sponsor are rated highly by their target consumers. Some advertisers tend to sponsor programs to which their products are linked. For example, Cartoon Network attracts such advertisers as toy makers, stationery makers, or entertainment industry companies whose products might feature the animated characters of a program they sponsor. It follows that such advertisers might prefer either global or local programming, depending on which is linked more closely to their products.

174 RQ6 asks how environmental factors are perceived to influence the programming strategy of U.S.-originated cable networks. It is still unclear if the similarity in economic conditions, physical conditions, legal environments, and infrastructure and supporting sectors could make the distribution of the same programming products more feasible.

Meanwhile, the general economic condition of a country could have an impact on programming strategies by U.S.-originated cable networks in the national market. They would have incentives to produce a number of local programs, if the market is large in terms

of size and wealth. The geographic proximity between markets could have an impact on

programming as the same programming is sometimes shared between local Asian channels

in geographically proximate markets. U.S.-originated cable networks currently do not face

severe official regulations, whether quotas or censorships, in such Asian markets as Japan,

Taiwan, or Singapore. As for supporting sectors, the availability of global marketing

infrastructure makes it possible for U.S.-originated cable networks to employ global

standardization strategies. Finally, advertisers and MVPD systems might have specific

preferences for programming.

Industry Competition

In order to survive intense competition, firms might need to engage in product adaptation and provide products that meet local needs and wants more suitably. However, as suggested by the international marketing literature, the choice of strategy to match

competition will be also affected by whether the firm competes purely local rivals or other global rivals and whether the competitive position of a firm varies among markets. With reference to RQ7, how the competitive intensity in a market and the differences in position among markets affect the programming strategy of U.S.-originated cable networks is analyzed below.

175 MTV

As noted previously, MTV adopted local adaptation as their programming strategy to survive in direct competition with local music channels. Nonetheless, the competitive

situation for local MTV channels in Asia varies depending on markets. For example, MTV

Japan competes with several domestic music channels, while MTV Taiwan, as a pure music

channel, currently does not have any rival channels, since Channel [V], a longtime

competitor in the market, has changed their programming strategies to focus more on

entertainment shows, reducing the amount of music programming (S. Chang, personal

communication, July 26, 2006). The way each local MTV channel reacts to the competitive

situation differs. Sasamoto (personal communication, March 15, 2006) states that MTV

Japan tries to differentiate themselves from domestic music channels by adding some

international shows supplied by the network, i.e., locally unavailable content, into their

lineup. Reality shows or non-music shows made by MTV U.S. might play a certain role in

this shift. It was also assumed that product adaptation might be unnecessary in less

competitive markets. Yet, MTV Taiwan tries to engage in extensive product adaptation in

spite of the absence of strong competitors in the market.

Cartoon Network

The Japanese and Taiwanese animated programming markets are similar in that

Disney Channel has established a solid position in both markets with their globally renown

animated programs, while some local channels rely on Japanese animated programs, which

are usually popular among local audiences. Cartoon Network Japan and Cartoon Network

Taiwan, however, respond somewhat differently to the competitive situation.

Japanese animation is important for Cartoon Network Taiwan not only to gain

higher audience ratings but also to differentiate themselves from Disney Channel, which

offers a number of their own animations in Taiwan. Although Cartoon Network and Disney

Channel also compete with each other in Japan, Cartoon Network Japan tries to differentiate

176 themselves from the rival in a different way from Cartoon Network Taiwan. While about

80% of Disney’s programming in Japan is in-house material, Cartoon Network Japan

features animated programs from multiple suppliers throughout the world rather than inclining toward a certain brand (S. Suetsugu, personal communication, March 16, 2006).

Although the international marketing literature suggests that competing against the same

rival in different markets, such as Cartoon Network competing with Disney Channel, would

result in greater product standardization, it does not necessarily hold true for Cartoon

Network’s programming products.

As noted above, Cartoon Network also competes with local animation channels in

Taiwan and Japan. Cartoon Network Taiwan and Yoyo Channel, the leading Taiwanese

animation channel, show almost the same amount of Japanese animation. By offering

similar programming products adapted to local preferences, they face stiff competition with

each other. This example shows that in order to compete with the domestic channel

attracting local viewers, Cartoon Network has to imitate the rival’s programming strategies.

Similarly, Cartoon Network Japan is in rival with some local animation channels, which offer exclusively Japanese animated programs. However, Cartoon Network Japan does not focus on Japanese animated programs but emphasizes international content. According to

Schofield’s interpretation (personal communication, August 25, 2006), Cartoon Network

Japan attempts to show the audience something different from what he or she watches everyday, i.e., Japanese animation.

ESPN

ESPN Taiwan faces fierce competition with a Taiwanese local sports channel

Videoland Sports. ESPN Taiwan, which had offered the U.S. version of Sports Center until

a few years ago, felt the necessity to offer local sports news for Taiwanese viewers who

prefer locally relevant news to internationally important news (J. Chen, personal

communication, July 24, 2006). Then, the channel started offering the localized version of

177 Sports Center. This shift in programming could be viewed as a consequence of stiff

competition from Videoland Sports. A sports news show by the domestic channel typically

reports local sports news and garners quite high ratings. This clearly shows that a global

television network should make their global programming products more relevant to local

audience so that they can compete with a successful domestic channel focusing on local

sports topics.

Discovery Channel

For Discovery Channel, strong local rivals might be rare in Asia. Only a few Asian

countries have strong documentary film industries with a large budget enough to support a

24-hour documentary channel. At the same time, the network competes with National

Geographic Channel and History Channel on a global basis. Discovery Channel enjoys the leading position as documentary programmer worldwide, and, according to Luff (personal communication, March 17, 2006), National Geographic Channel often copies what have been successful for Discovery Channel. A firm with the competitive position unvarying across multiple markets can successfully standardize its marketing strategy in all those markets, and this might hold true for Discovery Channel. The network’s position as the worldwide leading documentary programmer may not be affected much by the competitive

situation in individual markets, possibly enabling them to offer the same programming

worldwide with relative ease.

Cross case analysis

The competitive situation of the industry and a network’s position within it would

affect programming strategies. It is commonly found that U.S.-originated cable networks in

Taiwan offer more locally adapted programming in the competition, whether they compete

with purely local rivals or other global rivals. However, in Japan they tend to rely more or

less on international programs in order to differentiate themselves from domestic channels.

Although both the Japanese and Taiwanese video programming markets are competitive, it

178 is interesting that U.S.-originated cable networks tend to take different programming

strategies in both countries. It is likely that they usually adopt programming adaptation in

competitions with a singular domestic rival but consider programming differentiation in more intense competitions with multiple domestic rivals. Meanwhile, it might be true that as the international marketing literature suggested, a global product might be successfully offered if the competitive position of a firm does not vary among markets, as seen in an

example of Discovery Channel.

Brand and Country of Origin

Both brand and country images could influence product perceptions and evaluations

and purchase decisions by consumers. Creating positive image for a product among

consumers, the brand and country of origin associated with high quality could allow firms

to offer standardized products across markets more easily. Yet, consumers in various

countries might perceive a brand or a country of origin of a product differently. In regard to

RQ8, how the brand image of a U.S.-originated cable network and the image of the country

of origin of a product could affect their programming strategies are analyzed below.

Brand

Branding is vital for global television networks to become successful, since it

establishes an identity and creates an image that communicates what type of content is offered to a particular target audience. Specifically, many U.S.-originated cable networks tend to emphasize their worldwide reach and availability in an attempt to impress on audiences that they are global brands. Viewers might prefer brands with global image, considering that global brands are superior in quality.

MTV

MTV has been successful in building strong brand images in many overseas markets.

MTV’s primary brand images, as commonly perceived by their target audience in Asia

(viewers aged 15 to 34), are “cool,” “cutting-edge,” and “international.” The former two

179 images might result from non-product-related, sensory attributes, such as an audience imagery of being young and hip, as suggested by Chan-Olmsted (2006). Meanwhile, the international image is strategically important for Asian MTV channels. Sasamoto (personal communication, March 15, 2006) assumes, “Viewers of music channel can see the

difference in image between Space Shower (a local music channel in Japan) and MTV, that

is, the difference between a dyed-in-the-wool Japanese music channel and one that has more

of an international flavor…In terms of differentiation, it is important to add international flavor to our channel for a brand image.” MTV Japan is actually viewed by many people as a channel completely devoted to Western music for those who like it (T. Togawa, personal communication, March 15, 2006). Some might question whether or not local MTV channel’s emphasis on local music is wise when local viewers associate MTV with international music and could be disappointed to find that it looks like other local music channels (Magnier, 2000). Nonetheless, Sasamoto (personal communication, March 15,

2006) also considers that a pure international channel does not fit the Japanese market.

Likewise, while acknowledging the importance of international image, Chang (personal communication, July 26, 2006) claims, “We still need local content to keep the viewers watching us. That’s a dilemma.”

William Roedy, president of MTV Networks International, said that MTV would

make use of its brand recognition and plan to air both local and U.S. programs (Wall Street

Journal, 2000), and, as described earlier, a recent approach actually ensures a mix of

international and local music, depending on the demands of the individual market. Calling

MTV’s programming strategy “glocal,” which means to keep a global brand while being mindful of the local audience, Varma (personal communication, August 28, 2006) claims,

“The success lies in finding the right balance between the international and the local programming mix.”

180 Cartoon Network

The international image is also associated by Asian viewers with Cartoon Network.

Hashida (personal communication, March 16, 2006) assumes that the image would stem

from Cartoon Network Japan’s programming made up of animations from a variety of countries, along with the channel’s slogan, “Animation around the world is here for you.”

Cartoon Network Taiwan emphasizes their international image during preschooler shows,

since these children’s parents are attached by the image (G. Chou, personal communication,

July 25, 2006). Yet, Chou (personal communication, July 25, 2006) claims that the image

works only for the preschooler time block, stating, “To our main target (aged between 4 and

14), if you want to attract attention to a very international image, I think it doesn’t work

very much…For the main target, we cannot provide too much foreign animation from West

or the U.S.” Japanese animation, unlike its American or Western counterpart, might not

always evoke an international image among Taiwanese teens, and, paradoxically speaking,

therefore might be preferred by them.

In addition to the international image, Schofield (personal communication, August

25, 2006) suggests that Cartoon Network brand is also perceived as a funny channel,

because CNOs are in large part comedies. In spite of the image, however, it might be

difficult for the network to distribute comedy-based animations on a global or regional basis

on the ground that they are usually dialogue-based, and what viewers consider funny could

vary among countries.

ESPN

ESPN Asia is perceived by Southeast Asian viewers to be an authoritative voice in

sports (N. Wilkinson, personal communication, August 29, 2006). Yet, Hase (personal

communication, March 14, 2006) supposes that Sports-i ESPN, which is still unfamiliar to

many Japanese people, has not yet obtained a position as established as ESPN U.S., which

motivates people to subscribe to MVPD services as a must-see channel. ESPN is clearly a

181 global brand, whose programming services are available in various markets around the world. ESPN is recognized as an international brand among Taiwanese viewers, since they exclusively offer foreign sports programming, except for during primetime (J. Chen, personal communication, July 24, 2006). Chen (personal communication, July 24, 2006) believes that the brand image is formed by the content actually provided to audiences, rather than affecting the decision regarding programming. The international image, however, is sometimes regarded as a disadvantage by ESPN Taiwan, since viewers not interested in foreign sports programming might skip the channel soon after they watch ESPN’s logo on

television screens. It seems that ESPN still has a difficult time making its global brand

accepted satisfactorily among Taiwanese and Japanese viewers.

Discovery Channel

Discovery Channel is generally perceived by Japanese viewers as a global brand, not

a U.S. brand (P. Luff, personal communication, March 17, 2006). Meanwhile,

Chan-Olmsted (2006) assumes that Discovery Channel would seek to create associations

with certain product-related attributes, such as the extensive amount of information offered.

According to Gibbons (personal communication, August 29, 2006), many viewers look for

in-depth information about the world, while wanting to watch their local stories presented

by a global television network (J. Gibbons, personal communication, August 29, 2006).

Discovery Network’s programming is expected to meet those demands.

Cross case analysis

Executives and managers perceive their networks to be generally associated with an

international or global image by Asian viewers. Given such a brand image, the critical

question is how the image influences their product offerings. The high quality often emphasized by Discovery Channel might be readily expected, given a global image.

Meanwhile, some assert that the same programming should be offered on a network basis to

maintain the brand image. For instance, Schofield (personal communication, August 25,

182 2006) states that local Cartoon Network channels need to offer CNOs to reinforce the

Cartoon Network brand globally. Likewise, Gibbons (personal communication, August 29,

2006) considers that in order to protect and to develop Discovery brand around the world,

each Discovery channel should offer the same programming to some extent. Although the

brand image is formed by the content provided to audiences, the image can also affect what

type of programming is offered to maintain or enforce the image.

It was noted earlier that the ratio of network programming significantly differ among

networks and markets. Discovery Channel and Cartoon Network often distribute

programming on a global basis, partly because those networks believe that the global

programming could help them maintain and reinforce their brands. In terms of market, network programming is offered more in the Singaporean market than in the Japanese or

Taiwanese markets. This trend might be in part linked to Singaporean cultures characterized

by high power distance and collectivism, which are supposed to seek social and symbolic

functions in brands. The Singaporean market where foreign brands and products are widely

accepted could perhaps provide a more favorable context for the introduction of globally

standardized programming products.

Although the global image and locally adapted programming may be seemingly

incompatible, Varma (personal communication, August 28, 2006) believes that they are able

to coexist with each other. Local MTV channels actually borrow and incorporate some

elements from the global brand into their own programming. As a result, while the brand

still maintains the global image, the content of individual local channels is tailored to the

demands of the local market. In essence, U.S.-originated cable networks could provide a

single global brand, along with products tailored to each market, as MTV does.

Country of Origin

Audiences might rely on what country a program was originally made in as an

indicator of quality of the program. A program of a specific genre from a given country,

183 which is strong in the genre, could enjoy a favorable international reputation.

U.S.-originated cable networks could offer their programming on a global scale, capitalizing on the country of origin, if the United States is famous for the genre they specialize in.

MTV

MTV is the first television network to adopt a music video format. Many people

think that all programs showing music videos are MTV (Y. Sasamoto, personal

communication, March 15, 2006). In fact, few Chinese heed the fact that MTV refers to a

specific company and is not just a foreign term for music video, although calling music video an MTV is like calling a tissue a Kleenex or a copy a Xerox (Barden, 1999). Besides, the reality show first started with MTV’s “The Real World” (M. Varma, personal communication, August 28, 2006). In essence, both music video and reality show

programming have their roots in MTV U.S., and, as discussed earlier, popular culture has

always been one of the great American exports. Yet, there is no data showing that those

types of programming coming from the United States are perceived to be superior among

local Asian audiences.

Cartoon Network

Suetsugu (personal communication, March 16, 2006) views the United States, the

United Kingdom, and Japan as most highly regarded countries by Japanese viewers in terms of the production of animated content. Meanwhile, Schofield (personal communication,

August 25, 2006) suggests that whether or not viewers are concerned about the country of

origin of animation would differ among countries. Singaporean viewers do not care much

where a given animation originally came from (M. Schofield, personal communication,

August 25, 2006). Cartoon Network Japan’s programming strategy is based on the

assumption that viewers will embrace best content from around the world, whatever it may

be. Suetsugu (personal communication, March 16, 2006) asserts, “With all the

internationally-produced material we look at, we choose programs based on content rather

184 than country of origin.” Likewise, Chou (personal communication, July 25, 2006) assumes

that Japanese animation became popular in the Taiwanese market not because it is from

Japan but because of its content. Yet, Japanese animations are usually associated with high

quality by Taiwanese viewers (G. Chou, personal communication, July 25, 2006).

ESPN

In terms of sports programming, Chen (personal communication, July 24, 2006)

assumes that the telecast of professional baseball games from the United States or Japan is

always slick. ESPN Taiwan once presented the World Cup Baseball held in Cuba. The

quality of international telecast transmitted from Cuba was not so high, as it did not have

any graphics (J. Chen, personal communication, July 24, 2006). Yet, Taiwanese viewers watched the game eagerly, since the quality of play was high. The appeal of sportscast is determined largely by the play of athletes and the game itself rather than the technique of sportscast, as noted earlier. Presumably, where a certain sports program was originally made might often be less important to viewers than the play or the game itself.

Discovery Channel

While much programming on local Discovery channels is still originally made by

Discovery U.S., it is unclear if the United States is commonly perceived as a country of

origin producing excellent documentaries by Asian viewers. It might often be difficult for

viewers to be aware of a country of origin of a particular documentary program, as Gibbons

(personal communication, August 29, 2006) assumes that viewers sometimes cannot tell

where a documentary program has been made. This tendency might be further facilitated by

the fact that international co-production projects have increasingly become common in the

documentary arena.

Cross case analysis

In general, the country of origin effect appears to be small for television

programming. Few Asian audiences might think that a program originating in a particular

185 country is superior in terms of quality, with the exception of Japanese animations, which are often associated with high quality. In fact, it is perhaps becoming increasingly difficult to identify the nationality of programs offered by global television networks. Meanwhile, it is noteworthy that there seems to be variation among markets regarding how much viewers like programs made in their home countries. Singaporean viewers usually do not care whether a program was domestically made or not, while Japanese and Taiwanese viewers in general prefer their domestic programs. It is possible that Japanese and Taiwanese viewers are more ethnocentric than Singaporean viewers in terms of the preference of television programming, although it is still uncertain whether or not they prefer local programs because they associate those programs with high quality.

Firm Characteristics

What products are offered in individual markets is determined by forces found within the firm itself. Presumably, firm’s philosophy and orientation, resources, the degree of centralization/decentralization in decision-making, and the market entry mode could influence the product strategy. RQ9 assesses how such intra-firm characteristics of

U.S.-originated cable networks possibly influence the decision on their programming strategies.

Philosophy/Orientation

How a firm’s overall business philosophy and orientation affect programming strategies of sample networks are analyzed below. Note that although firm’s business orientation is certainly reflected in considerations regarding whether a given action is worth its costs or which of the options has the highest benefit/cost ratio, those cost-benefit considerations are analyzed separately under the following subheading.

MTV

MTV Networks Asia produces a book entitled “1.2.3.M.T.V.: A Learn to MTV

Book,” which is little known to people outside of the network. Written in seven different

186 languages, namely, English, Bahasa Indonesia, Simplified and Traditional Chinese

characters, Japanese, Korean, and Thai, the publication is intended to keep MTV employers in Asian markets all staying focused on the core of the MTV brands. The book articulates,

“We are all equally responsible for our brand image and its preservation and momentum

(p.4).” Local MTV channels’ only obligation is to “be true to the MTV brand” (Chalaby,

2002). While keeping the brand image unified across markets, MTV also adheres to a

philosophy of localization (Viacom Inc., 2005b). Indeed, Asian MTV channels basically

decide programming so as to meet the demand in each local market. These attitudes are well

conceptualized in MTV’s famous philosophy, “Think globally, act locally.” Each of the

MTV channels has to adhere to the overall style, programming philosophy, and integrity of

MTV Networks, while promoting local cultural tastes and musical talent (Viacom Inc.,

2005b).

What is noteworthy, however, is that they try not only to meet market demand but

also to create demand or to seek potential demand as a trendsetter of youth culture. MTV

Taiwan wants to introduce cutting-edge music usually from the United States or the United

Kingdom to their local markets, even though it is unclear if the music will be accepted by

local audiences (S. Chang, personal communication, July 26, 2006). Chang (personal

communication, July 26, 2006) considers the importation of fresh and new things into a

local market to be MTV’s responsibility. MTV’s audiences in Asia are constantly seeking

more information, creativity, and change every single day (M. Varma, personal

communication, August 28, 2006). It is specified in the aforementioned book 1.2.3.M.T.V.

that MTV strives to always be on the cutting edge of youth culture. In other words, MTV

still tries to be a purveyor of internationally innovative and progressive music and fashion.

Cartoon Network

Mark Buhaj, Cartoon Network’s vice president of programming and acquisition,

stresses the importance of brand integrity, stating, “You have to be careful that you do not

187 put so much emphasis on localization that you risk the quality of the channel…Any form of localization has to be relevant to the channel and of a similar quality” (Television Business

International, 2004). In regard to this point, Suetsugu (personal communication, March 16,

2006) assumes, “Since all Cartoon Network channels have a similar identity, we all end up offering the same sort of programs.”

Schofield (personal communication, August 25, 2006) claims, “It’s important for all our channels to have some presence of our own cartoons there.” Likewise, Cartoon Network

Japan considers CNOs somewhat ideologically. Suetsugu (personal communication, March

16, 2006) says, “We could always cut back on the amount of the U.S. Cartoon Network content, but Cartoon Network Japan, as a part of the Cartoon Network brand, should always be offering a certain amount of Cartoon Network content.” In essence, CNOs are necessary for them to maintain their identity as a Cartoon Network channel. Hashida (personal communication, March 16, 2006) suggests that CNOs make up the basis of Cartoon

Network Japan’s programming schedule, although in terms of percentage, CNOs (16%) actually do not account for a large portion of the programming schedule.

ESPN

ESPN, calling themselves the “worldwide leader in sports,” might attempt to win the broadcast rights for sporting events and then to supply the telecast of these events around the globe. The network, however, runs into constraints when they try to do so, since the broadcast rights are, as described earlier, usually granted for a given national territory on an exclusive basis. Hase (personal communication, March 14, 2006) doubts that the network has seriously put effort into expanding coverage for markets outside the American continent, pointing out their non-interest in securing the broadcast rights to rugby games for the rugby-mad Australian and New Zealand markets as an example of this indolence. Hase

(personal communication, March 14, 2006) concludes that ESPN is not so successful on a global scale.

188 In fact, broadcast rights issues are a key to understanding the programming of ESPN.

Tim Bunnell, ESPN’s senior vice president of programming and marketing, asserts, “You want to get something that has maximum appeal across countries. But, it just gets very

pricey after a while. Our approach is to localize as much as possible. The goal is to develop

original programming for specific markets” (Petrecca, 2002). Asian ESPN channels have

developed much original programming. Yet, it might be reasonable to ascribe this trend to

ESPN’s inability to secure broadcast rights for foreign markets rather than to view it as a result of the facilitation of localization at a network level.

Discovery Channel

Discovery Channel’s programming philosophy is based on the premise that people

are curious about the world around them, as exemplified by their famous slogan, “Explore

your world.” The network attempts to find new information, which has not been well known

but is relevant to their viewers, and present it in the form of high quality programming (J.

Gibbons, personal communication, August 29, 2006; P. Luff, personal communication,

March 17, 2006). While featuring global topics that affect everybody, Discovery Channel also needs to offer programming focused on issues particularly relevant to regional or local viewers. As well as most of other global television networks, Discovery Channel tries to balance between maximizing programming that is shared across their local channels and being responsive to the needs of local markets. According to Gibbons (personal communication, August 29, 2006), Discovery Asia supplements their universally shared programming with content targeted very specifically at the needs of local markets.

Cross case analysis

U.S.-originated cable networks sampled for the present study clarify their business

philosophy and orientation, and their current programming strategies by and large bring

those philosophy and orientation into shape. In order to think globally and act locally, MTV

implements the localization of programming containing a certain degree of international

189 flavor, while targeting young audiences across the globe as a “voice of youth culture.”

Cartoon Network usually gives priority to their original animation series, because those series are viewed as an identity for local Cartoon Network channels to be part of the network and actually make up the basis of their programming schedule. Discovery Channel tries to have their viewers explore events of the global or regional interests through their programming products. Due to this orientation, much programming of Discovery Channel is shared across the globe or the region.

Meanwhile, it appears that ESPN does not have a clear orientation toward their international business as a global television network, at least in comparison with MTV,

Cartoon Network, and Discovery Channel. Oftentimes, ESPN only has rights to offer certain events in a specific country, notably in the United States, and each of the affiliates has to deal with the rights individually to offer them in its territory. In this situation, it might be hard for ESPN to formulate a programming strategy on a global basis.

There is another important point that should be addressed in conjunction with a

U.S.-originated cable network’s overall business orientation influencing their approach to international marketing. As described in the review of the international marketing literature in Chapter 2, firms operating abroad are classified into the following four types, based on different strategic approaches adopted by them: international, multinational, global, and transnational firms. Which approach U.S.-originated cable networks sampled for the current study actually employ would be analyzed after scanning of their resource utilization, centralization/decentralization in decision-making, and market entry mode.

Cost-Benefit Consideration

It is likely that U.S.-originated cable networks would carefully estimate the overall cost and benefit of a programming product. Production costs are a major area to generate cost savings for television programming, since, as noted previously, the proportion of programming expense that goes toward production costs is generally large. Yet, there might

190 be a significant difference in viewpoints concerning the cost effectiveness of product between firms. Recall an early discussion that a firm with a greater emphasis on cost control will be likely to have a policy of a unified product image across markets, offering standardized products, while another firm with ambitious sales will be likely to adopt non-uniform products. The economies of scale sustained from product standardization for television programs are great, and therefore such programs might be considered appropriate for global distribution from a cost-benefit perspective. Because the marginal costs of providing the programming to additional viewers are extremely low, a very high portion of additional revenues could flow through into profits. Nonetheless, it is uncertain whether or not the profit accruing from programming standardization is really enormous, because profitability depends not only costs but also sales, and programs distributed globally might be unpopular in local markets.

MTV

For local MTV channels, it is certainly efficient in terms of cost reduction to air programs supplied by MTV Networks with minimal amount of modification (e.g., language translation). According to Varma (personal communication, August 28, 2006), 80-90% of

MTV Networks’ shows are available to them for no fee. Sasamoto (personal communication,

March 15, 2006) points out, “If we were to air only content supplied by MTV Networks, our costs would be less than halved.” At the same time, however, it is believed that even if costs are low, it does not make business sense, since MTV Japan would not be able to attract many viewers with network programs, thus limiting their advertising potential (Y. Sasamoto, personal communication, March 15, 2006). Chang (personal communication, July 26, 2006) agrees with Sasamoto’s viewpoint, stating, “Even if you can save money [by putting content made by MTV Networks], you have to sacrifice the ratings.” Many programs she has imported to Taiwan so far have not actually been so successful in terms of audience ratings.

Varma (personal communication, August 28, 2006) assumes that if they put an international

191 show into a local market, the rating and therefore the revenue obtained from it in the market

would be often less than those from the program originally produced in the market. It

should be realized here that profit is influenced by the balance of cost and revenue. Varma

(personal communication, August 28, 2006) asserts, “If you do it right, localization process

is bound to be richer in revenue.”

Cartoon Network

The development of an animation series often necessitates a lot of capital investment,

and Cartoon Network Asia/Pacific, a wholly owned subsidiary of Turner Broadcasting,

needs to bear a portion of costs for developing and producing CNOs. In turn, they can also make licensing and merchandise revenues (G. Chou, personal communication, July 25,

2006; M. Schofield, personal communication, August 25, 2006). Those secondary revenues could be a huge benefit for Cartoon Network. In terms of merchandising, animation

characters exist not only in programs but also in a whole wide range of places, such as toys,

bonus goods in candy packages, prints on T-shirts, and so on, whereby easily creating

synergies for the right holders. For instance, Disney characters have long been popular overseas, as witnessed by Mickey Mouse’s status among the most recognized icons in the world, and more than half of the sales of Disney merchandise come from outside the United

States (Weber, 2002). In essence, animation and related merchandise could complement each other. As Edwards (2004) points out, animated programming increases the audience recognition of and becomes a commercial for featured characters, and profits brought in from merchandising can eventually help producers recoup the high production cost of

animation. Presuming that the network desires Cartoon Network Taiwan to show more

CNOs to support merchandise business, Chou (personal communication, July 25, 2006)

concludes that Cartoon Network Taiwan would have to show a certain amount of CNOs,

even if they do not seem suitable for Taiwanese viewers.

192 Meanwhile, for Cartoon Network, some third party content may be quite expensive.

According to Chou (personal communication, July 25, 2006), license fees that Cartoon

Network Taiwan pays to acquire broadcast rights to Japanese animation are usually high.

The channel, however, features Japanese animation as a highlight for their afternoon and evening programming, because school children want to watch them. Third party programs usually get higher audience ratings than network’s original programs, possibly leading to higher advertising revenues (G. Chou, personal communication, July 25, 2006). Otherwise, the third party products will not be acquired. In contrast, only rarely does Cartoon Network

Southeast Asia show Japanese animation, although Japanese animation is also quite popular in many Asian markets, mainly because of a considerable cost of license fees they pay to offer it in a number of countries covered by the feed (M. Schofield, personal communication, August 25, 2006). Schofield (personal communication, August 25, 2006) clearly states that they do not spend much money on purchasing even programs from

Warner Brothers for Cartoon Network Southeast Asia.48

ESPN

Costs for broadcast rights to sports events can vary significantly according to country, but universally preferred events usually charge top dollar (Petrecca, 2002). For instance, NBC paid $3.5 billion for the exclusive broadcast rights in the United States to the five Summer and Winter Olympics between 2000 and 2008. Although Sports-i ESPN can negotiate individually with rights holders, Hase (personal communication, March 14, 2006) claims that programs with pricey broadcast rights are hard for them to get. While believing that the success of a sports channel is dependent on securing access to rights for attractive

48 In the relationship with Warner Brothers, Cartoon Network pays the studio for programming. The studio often charges the network a special discount rate. The network, however, is not always given a first window for every title. In terms of animated movies, the studio often sells them to movie networks and over-the-air broadcasters prior to Cartoon Networks; animated series are also sold to broadcasters but not to other cable channels before Cartoon Network premieres them (M. Schofield, personal communication, August 25, 2006).

193 sporting events, Sports-i ESPN considers the cost effectiveness as the most important when choosing content. Hase (personal communication, March 14, 2006) states, “The costs involved [for the coverage of major sporting events] are enormous, and, in the end, it just doesn’t pay off for us.” Likewise, Wilkinson (personal communication, August 29, 2006) asserts that their ultimate criteria for program selection in Asian markets are cost and revenue.

As described earlier, ESPN STAR Sports was formed between ESPN and STAR

Sports to gain control of the market by securing exclusive sporting event broadcast rights and offering them to all Asian markets except Japan (Cable & Satellite Asia, 1996b; Hughes,

1996). At present, the headquarters purchases sports rights on a regional basis for their own channels and asks each channel if they would like to offer it in their markets. As a result, while tennis and golf are usually taken by all channels in the region, Little League Baseball games, for example, are picked up only by ESPN Taiwan (J. Chen, personal communication,

July 24, 2006). Although Wilkinson (personal communication, August 29, 2006) views soccer, golf, and tennis as sports popular in many countries, they are not so accepted in

Taiwan (J. Chen, personal communication, July 24, 2006). The programming cost is split among channels that offer the program. In theory, if a program is taken up only by one local channel, the channel has to bear almost all costs necessary to purchase the program. This could often be the case with ESPN Taiwan, which identifies a unique taste for sports in their domestic market. Chen (personal communication, July 24, 2006) claims that international programs are very expensive, even though costs are shared with other ESPN channels.

ESPN Taiwan wants to increase locally produced content, since it could deliver higher audience ratings with lower costs (J. Chen, personal communication, July 24, 2006).

In addition, programs purchased on a regional basis do not come along with local languages. Chen (personal communication, July 24, 2006) emphasizes the necessity of language customization, but it costs a lot. Based on a media economics theory, it has often

194 been claimed that costs necessary for dubbing or subtitles are negligible in comparison with

the high fixed costs initially necessary for its production. Nonetheless, the costs might be considered expensive in an absolute rather than a relative sense by a local channel with budget constraints. As is the case with ESPN Taiwan, the local team might eventually shy

away from spending money on language customization for programming offered during

relatively unimportant time periods.

Discovery Channel

Discovery Asia’s former senior vice president and general manager Kevin McIntyre

once said, “We recognize the need for some elements to be localized and for language

customization but also realize the economies of scale in packaging and delivering centrally”

(Cable & Satellite Asia, 1996a). There seems to be a certain logic for Discovery Channel to

maximize network programming across a number of local channels. Quality is extremely

important for Discovery Channel (J. Gibbons, personal communication, August 29, 2006; P.

Luff, personal communication, March 17, 2006). Yet, high-quality programs are often made

with huge production costs, and Discovery’s programming is no exception. High quality and

depth of information, which could meet worldwide demand, are not obtained cheaply (P.

Luff, personal communication, March 17, 2006). Therefore, the budget for such a

production can actually exceed a million dollars (J. Gibbons, personal communication,

August 29, 2006), and each of local Discovery channel is supposed to contribute to the

global or, in some cases, the regional production. As Gibbons (personal communication,

August 29, 2006) suggests, by producing and distributing the same program on a global

basis, a network can achieve economies of scale, which allow them to invest more money in

creating another high-quality programming product.

Discovery Japan currently does not produce any original programming, because they do not have the budget for such endeavors. Discovery Asia is fully responsible for providing local Asian Discovery channels with programming (P. Luff, personal communication,

195 March 17, 2006). As for the acquisition of programs, the Asian regional headquarters secures the rights to the programs for the whole Asia region. Luff (personal communication,

March 17, 2006) believes that it is much more cost-effective to share content across the region than to produce or acquire content solely for an individual market. It is perhaps economically unfeasible for the network to make ten different documentary programs for ten different markets, while maintaining the same level of quality as network programming made with a production budget of a million dollars. As Gibbons (personal communication,

August 29, 2006) asserts, the fundamental issue for Discovery Channel is that unless much programming is shared, and production costs are spread across different markets around the world, their business model does not function economically.

To produce an original documentary program is, all things being equal, usually more expensive than to acquire a documentary program. Yet, Discovery Channel still seeks to retain worldwide rights to programs produced by themselves so that they can leverage all the rights associated with the programs, resulting in revenues from DVDs, pay TV, and broadband and mobile services, to name a few. In essence, Discovery Channel aims to maximize the returns from ownership of rights by “windowing.” Gibbons (personal communication, August 29, 2006) claims, “If you can do that (tap into rights), then it’s more cost efficient to make your own program rather than sharing the license with someone else.”

Cross case analysis

How sample networks consider the cost and benefit of programming vary among them. Although most programs can be supplied from MTV Networks at a low rate or for free, MTV’s executives and managers believe that creating local products would eventually lead to higher revenues, considering that the potential loss of sales that may result from not adapting a program to local tastes would not be offset by cost saving. Yet, Discovery

Channel takes the opposite point of view, attaching a high value to scale economies, considering that producing a program, which can be shared with all the regions of the world,

196 would be more cost-efficient than producing a program at a local level. To pay off huge production costs for high-quality programs, they should be distributed as widely as possible, and profits, if any, can be invested to further productions of the same quality.

This logic certainly reminds us of rationales underlying a strategy of global products proposed by Levitt (1983): Consumer interests become increasingly homogeneous across the globe; people around the world are willing to sacrifice preferences in product features, functions, or designs to get higher-quality products at lower prices; and substantial economies of scale in production and marketing can be achieved through supplying the standardized products to global markets.

Cartoon Network, as well as Discovery Channel, tries to distribute their original animated series on a global basis, anticipating revenues yielded from licensing and merchandising those programs and the characters featured in them. Discovery Channel and

Cartoon Network encourage their affiliates to invest in the development of network programs. Although those programs might not be so popular in some local markets, they provide networks with benefits for rights holders, such as opportunities to exploit economies of scale (e.g., Discovery Channel) or economies of scope (e.g., Cartoon

Network) on a global scale. To the contrary, it is hard for ESPN to sustain the economies of scale with the international telecast of sporting events, since broadcast rights are usually granted for a given national territory on an exclusive basis. Local ESPN channels consider that local programming is often not only popular in local markets but also relatively inexpensive.

Property-Based Resource

At the business strategy level, resources refer to inputs that can be used to implement strategies. Resources for global television networks might be programming products themselves or might be capital, knowledge, experience, personnel, or material, which could be utilized for television programming. Since resources include a wide range,

197 according to Chan-Olmsted’s typology (2006), the utilization of property-based resources,

which are legally protected through property rights, is analyzed first under the current

subheading.

MTV

Given each Asian MTV channel’s lesser reliance on MTV Networks for the supply

of programming, the question is what advantage the channel has in terms of programming

for being part of a global television network. Sasamoto (personal communication, March 15,

2006) says, “We are able to obtain content from worldwide MTV channels, though it makes up only 10 to 20% of our programming.” The retaining of broadcast rights by MTV U.S. for programs to be shown overseas is a huge plus (Y. Sasamoto, personal communication,

March 15, 2006). Varma (personal communication, August 28, 2006) notes the importance of a library of material created and shared among all their channels around the world, saying,

“I can borrow MTV from anywhere and put it onto any of our channels here in Asia.” Local

MTV channels can in principle utilize network’s content resources as often and as flexibly as they like, although those programs are usually developed in a foreign market and therefore maybe irrelevant to viewers of other markets. MTV Taiwan’s Chang (personal communication, July 26, 2006) claims, “You need to use your international resources, but you still utilize these resources to make local content.”

Cartoon Network

Cartoon Network Japan has a strong sense of sharing resources with other Cartoon

Network channels in terms of product acquisition (M. Hashida, personal communication,

March 16, 2006). In fact, it is often the case that Cartoon Network affiliates in several

countries jointly purchase third party content. Cartoon Network Japan considers it essential

to be part of a network in order to gain this access to programs. Additionally, as discussed

earlier, CNOs, i.e., content resources, may generate soundtracks, books, related

merchandising opportunities, possible television spin-offs, CD-ROMs, video games, and

198 amusement park rides. When resources are shared across the business and transferred from

one activity to another, economies of scope are sustained, leading to the creation of synergy.

ESPN

According to Wilkinson (personal communication, August 29, 2006), ESPN STAR

Sports realizes advantages to be an affiliate of ESPN through resource sharing. ESPN

provides financial resources, which could be reflected in programming. In terms of content

resource, they share news gathering services. At the same time, as Hase (personal

communication, March 14, 2006) repeatedly emphasizes the importance of securing

broadcast rights, Sports-i ESPN’s success might hinge in large part on whether or not they

can acquire content through an expanding network of local channels, such as ESPN STAR

Sports, and obtain the rights to offer more appealing sporting events. Hase (personal

communication, March 14, 2006) hopes that ESPN and J Sports, which operates Sports-i

ESPN, will work together to secure sports broadcast rights in both the United States and

Japan. While J Sports is considered by ESPN as a vital partner in Asia, however, their financial link with ESPN might be too insignificant (3%) to motivate ESPN to commit more

resources to Sports-i ESPN.

Discovery Channel

An advantage for each local Discovery channel to be part of a global television

network is that they have huge resources available all around the world (P. Luff, personal

communication, March 17, 2006). Each local Discovery channel constantly utilizes content

resources of the network, as they can share much programming on a global or regional basis.

Cross case analysis

As a program is a property-based content resource owned by a television network, to

offer the program is just to capitalize on a resource of the network. In fact, each affiliate can

benefit from sharing the content resource within a network. Much programming of Asian

199 local Discovery channels is accounted for by programming, which can be shared with all

the regions of the world. This also holds true for Cartoon Network and, to a lesser degree,

MTV. Meanwhile, ESPN distributes a relatively small number of programs on a global basis.

Although ESPN Asia’s Wilkinson (personal communication, August 29, 2006) states that

sharing of content resources is one of ESPN’s advantages, it appears that broadcast rights

issues often prevent ESPN from establishing a function of distributing content resources

with complete control within the network. This is in direct contrast to MTV Networks,

which usually secures broadcast rights for content to be shown overseas. In essence, the

degree of reliance on networks for content resources differs from one network to another,

which would eventually lead to the different amount of network programs offered on a local level.

In terms of financial resources, some managers of local channels feel that sufficient

programming budgets are not provided to them. MTV Networks becomes more

conservative in investments to local franchise (S. Chang, personal communication, July 26,

2006). Controlled by the regional headquarters, Cartoon Network Taiwan and Discovery

Japan do not have their own budgets to do programming exclusively for the local market (G.

Chou, personal communication, July 25, 2006; P. Luff, personal communication, March 17,

2006). Chang (personal communication, July 26, 2006) claims that in order to produce or acquire good programs at a local level, they simply need more programming budgets.

Knowledge-Based Resource

The importance of knowledge-based resources in the media industry should be

underscored, since such resources as experience, creativity, know-how, or industry knowledge, remain the essential elements in the production and marketing of media content.

The question is how those types of resources, if any, could be tapped into for programming.

200 MTV

MTV Taiwan relies heavily on the global network of MTV not for programming

resources but for other resources, such as creativity or brand authority (S. Chang, personal

communication, July 26, 2006). Those resources have an impact on programming, albeit indirectly. Varma (personal communication, August 28, 2006) considers talented personnel from different parts of the world and their visions shared within the network to be one of

biggest advantages. In fact, local MTV channels often share ideas with each other within the

network. Chang (personal communication, July 26, 2006) states, “That’s where our

creativity comes from.” According to Togawa (personal communication, March 15, 2006),

information about programs made by MTV Networks around the world is delivered to MTV

Japan’s programming division. Then, an idea conceived to succeed in the local market is

actively adopted in order to make local programming. As described earlier, Varma (personal

communication, August 28, 2006) expects each local MTV channel to successfully translate

good ideas into its local context.

MTV also has high authority over artists. Sasamoto (personal communication,

March 15, 2006) admits that MTV Japan has the significant backing of MTV Networks

regarding bargaining power over artists. Unlike local music channels, MTV is a global

television network. Chang (personal communication, July 26, 2006) says, “When a label

company wants to promote an artist, they will come to MTV Taiwan not only because of

MTV’s high rating in Taiwan but also because of our power for the whole Asian market.” In

addition, delivering unmatched access to major international music talent is an undoubted

strength of MTV Networks. As a recent example, Michael Jackson appeared at MTV

Japan's Video Music Awards 2006 to accept the Legend Award. It is doubtful that he would

have appeared at music video awards hosted by a domestic music channel. Chang (personal

communication, July 26, 2006) states, “If we want to invite some artists to Taiwan, we will

201 rely heavily on the international network of MTV.” MTV’s brand authority just helps in

negotiations (M. Varma, personal communication, August 28, 2006).

Cartoon Network

As noted previously, CNOs have recently been made more from an international

perspective so as to work not only in the Unites States but also in the rest of the world.

Schofield (personal communication, August 25, 2006) says that all of Cartoon Network affiliates have a voice and are involved in the green light process for new CNOs. It is likely that the sharing of creativity and the exchange of information among local affiliates coordinated by the corporate headquarters are essential to developing network programs, such as CNOs, which are to become successful in various parts of the world.

ESPN

Chen (personal communication, July 24, 2006) and Wilkinson (personal

communication, August 29, 2006) emphasize the significance of international production

know-how brought by talented personnel who is attracted to ESPN STAR Sports from all

over the world. They believe that the know-how could be a unique resource of competitive

advantage over their local rivals.

Discovery Channel

There appears to be good communication across regions to share information and

creative ideas within Discovery Channel. Dawn McCall, president of Discovery Network’s

International, said, “We talk to each other a lot more, and that is a huge benefit” (Winslow,

2001). In fact, Luff (personal communication, March 17, 2006) realizes himself being part

of Discovery’s international business and in regular contact with people in the Singapore

office, in the London office, or other places around the world. Luff claims, “We get ideas

from them or even give them ideas of things that we have just done and are working very

well in our market.”

202 Cross case analysis

MTV’s local teams in Asia are not necessarily expected to use a content resource on

its own but to leverage knowledge-based resource, i.e., creativity or rich idea included in the

content resource, to produce their local programs. Indeed, not only MTV but also other

sample networks emphasize the sharing information and creative ideas at a network level as

an advantage of being part of a global television network. There is a good level of an

information sharing within Cartoon Network (M. Schofield, personal communication,

August 25, 2006); programming ideas are shared among ESPN affiliates (N. Wilkinson,

personal communication, August 29, 2006); and as a sort of a global network, information

and creative ideas are constantly shared among Discovery Channel’s affiliates (P. Luff,

personal communication, March, 17, 2006).

It appears that U.S.-originated cable networks have established a mechanism to

transfer ideas or know-how across markets. These knowledge-based resources could be the

basis of the production and marketing of products in the entertainment industry. How those

resources are leveraged for programming is perhaps twofold. On the one hand, ideas, which

have been successful in a market, could be transferred to make programs in different markets (e.g., MTV). On the other hand, inputs from various markets in the world are integrated in an attempt to make network programs appealing on a global basis (e.g.,

Cartoon Network and Discovery Channel).

Degree of Centralization/Decentralization

According to the international marketing literature, globally standardized product

would be offered when the corporate headquarters holds centralized authorities. In contrast,

if subsidiaries or affiliates have strong positions, it is likely that decision-making is

decentralized and delegated to those local entities. If this is the case, local subsidiaries or

affiliates would develop their own market strategies independently of the corporate

headquarters.

203 For the analysis of how centralization or decentralization of authority in

U.S.-originated cable networks could influence programming strategies, it is beneficial to scan the ownership structure of U.S.-originated cable networks sampled for the current study (see Figures 5-2 to 5-5). They generally have a three-tier structure, consisting of owners of a network (e.g., Viacom), the corporate headquarters in the United States (e.g.,

MTV Networks), and affiliates and local channels owned and operated by the affiliates (e.g.,

MTV Networks Asia and MTV Taiwan). Moreover, U.S.-originated cable networks typically have two business models in the region: the multi-market model and the single-market model. Under the former model, the corporate headquarters of

U.S.-originated cable networks usually elect a wholly-owned subsidiary as a substantially regional headquarters from which several channels for diverse markets in the region are operated as their properties. Meanwhile, in the latter model, joint ventures are usually formed with local partners to establish local affiliates, which operate local channels devoted to a particular market.

MTV

Sasamoto (personal communication, March 15, 2006) mentions, “They (MTV

Networks) have no say in what we choose to offer.” In an extreme case, it would be possible

for MTV Japan to offer nothing but their local programs. Even if MTV Networks

recommends some music or artists, local teams finally decide if they are to be presented for local audience (S. Chang, personal communication, July 26, 2006). Varma (personal communication, August 28, 2006) says that only very rarely does he get a call from MTV

Networks pressing him to air network programs. In essence, each Asian MTV channel is basically allowed to exercise its own discretion in programming so long as it does not hurt

MTV’s image.

It seems that MTV Networks has a relatively decentralized organizational structure,

whereby programming decisions are made by the autonomy of local teams in view of

204 specific local market characteristics. As the programming chief at MTV’s regional

headquarters, Varma (personal communication, August 28, 2006) asserts that if there are any

disagreements between MTV Networks and a local team in terms of programming, he

usually supports the local team, respecting the representatives of the local market, because

such people would have the best knowledge of the market. In fact, MTV Networks Asia

once faced a problem when the network made a one-hour special about the 9/11 attacks

from the U.S. perspective (M. Varma, personal communication, August 28, 2006). Yet, they

finally refused to accept the program, showing a respect for Muslim nations, such as

Indonesia and Malaysia. This episode illustrates that programming decision based on

sensitivity to local ideologies and religious beliefs function at local level within MTV

Networks.

Cartoon Network

Cartoon Network Japan is never pushed to offer certain programming by the

network, and decisions regarding programming are left wholly up to their discretion.

Hashida (personal communication, March 16, 2006) says, “They (Cartoon Network) don’t tell us to devote a certain percentage of our airtime to Cartoon Network material or anything like that.” Turner Broadcasting is basically not involved with anything other than protecting the Cartoon Network brand’s image (M. Hashida, personal communication, March 16,

2006). Hashida (personal communication, March 16, 2006) also supposes that Cartoon

Network channels are all entrusted with complete control over what they chooses to offer in their local markets, claiming that they probably would not have much success, if their programming was chosen by the corporate headquarters.

Hashida’s remark, however, does not always hold true for Cartoon Network

channels operated by Cartoon Network Asia/Pacific. Those channels are basically not

allowed to decide their own programming. More precisely, Cartoon Network Asia/Pacific

provides a certain amount of autonomy to local teams (M. Schofield, personal

205 communication, August 25, 2006), but a final decision is always made at the regional

headquarters level. Managing the acquisition budgets for local channels, Schofield (personal

communication, August 25, 2006) says that she has the final say about what gets bought at the local channel level. When a local team wants to buy a program, it should be approved and finalized by Cartoon Network’s Asian regional headquarters (G. Chou, personal

communication, July 25, 2006). Schofield (personal communication, August 25, 2006)

obviously trusts inputs from local managers, understanding that they have the best

knowledge of local audience and markets. Yet, at the same time, as noted earlier, Schofield

(personal communication, August 25, 2006) also thinks that local Cartoon Network

channels should always offer a certain amount of CNOs. Chou (personal communication,

July 25, 2006) mentions that Cartoon Network Taiwan is obligated to show CNOs, even if

they do not seem suitable for the Taiwanese markets.

ESPN

As Wilkinson (personal communication, August 29, 2006) suggests, ESPN STAR

Sports has autonomy from ESPN in terms of programming decisions. At the same time,

ESPN STAR Sports also exerts an authority in the close relationship between the

headquarters and local channels they own and operate. It is likely that the reason behind much regional programming offered by their local channels is in part attributed to this authority. To be sure, those channels began offering relevant sports in specific markets, such as cricket in India or baseball in Taiwan, though within a limited amount of time. They also present localized versions of Sports Center. Yet, their programming is basically decided by

ESPN STAR Sports headquarters in Singapore, where almost all of their production teams are based in (J. Chen, personal communication, July 24, 2006).

Although local teams can plan their own programming for their local channels, it

must be approved and finalized by the headquarters. Actually, Wilkinson (personal

communication, August 29, 2006) implies that local channels owned and operated by ESPN

206 STAR Sports do not have any choice, simply viewing the channels as outlets for ESPN

STAR Sports’ programming in local markets. Chen (personal communication, July 24,

2006) mentions that ESPN Taiwan’s relationship with ESPN STAR Sports brings some

disadvantages to the local channel, such as regional programs supplied without local

language commentary and expensive cost allocation.

Meanwhile, Sports-i ESPN has no choice but to exercise its own discretion in

programming under the present situation, in which very little content appealing to Japanese

audiences is supplied by ESPN. ESPN takes virtually no part in deciding what content is offered on Sports-i ESPN. Hase (personal communication, March 14, 2006) claims that

ESPN says nothing, even if Sports-i ESPN purchases programming from a rival firm of

ESPN.

Discovery Channel

Discovery Channel’s programming decisions are in principle made at the regional

headquarters level. It seems that Discovery Asia has the autonomy to program

independently from Discovery Communications, the corporate headquarters. According to

Gibbons (personal communication, August 29, 2006), “There is no one forcing us to add

programs around the world. We make decisions in consultation with the local markets as to

what kind of programming is going to resonate the most in that marketplace. And then, we

are free to make those decisions.” Then, commissioning and acquisition proposals are

coordinated through a central committee, whose meetings are attended by representatives

from all regions and where they are free to accept or reject any proposal, according to their

perception of local needs (Jenkins, 2001).

In the programming team at Discovery Channel’s Asian headquarters, there are

people dedicated to local markets, who are aware of requirements from local Discovery

channels and major topics of interest to local viewers (P. Luff, personal communication,

March 17, 2006). In this regard, the network agrees that programming is best done by

207 people who know and understand each individual market, and local Discovery channels actually have a say about which programs work well in their local markets. Gibbons

(personal communication, August 29, 2006) asserts that it will undoubtedly be inappropriate to impose programs on local markets. From the local perspective, however, Luff (personal communication, March 17, 2006) mentions, “It’s very much a collaboration [with the regional headquarters] rather than having autonomy…We don’t have the ability to just go off and do whatever we want.” Not only does Discovery Japan have to work with the regional headquarters on all of their decisions regarding programming, but also, as noted earlier, they do not have their own budgets to do programming only for the local market.

Cross case analysis

As a whole, Asian affiliates of U.S.-originated cable networks currently have the freedom to decide programs offered in their markets, as long as they are consistent with brand images of the network. MTV Networks rarely intervenes in MTV Networks Asia’s programming decisions (M. Varma, personal communication, August 28, 2006); Cartoon

Network Asia/Pacific is a reasonably self-sufficient regional headquarters (M. Schofield, personal communication, August 25, 2006); ESPN STAR Sports can reject ESPN’s programming, which may be unsuitable to Asian viewers (N. Wilkinson, personal communication, August 29, 2006); and Discovery Asia is free to make programming decisions (J. Gibbons, personal communication, August 29, 2006). In essence, each of these

Asian affiliates is basically given autonomy from their corporate headquarters in terms of programming decisions. It can be safely noted that U.S.-originated cable networks sampled for the current study all have a decentralized structure in decision making.

It seems that U.S.-originated cable networks in principle realize that understanding local tastes allows a network to adapt its programming to better suit the wants and needs of local viewers and that this is best done by people who are familiar with local markets.

208 However, how much freedom with regards programming decisions is actually given from

regional headquarters to local teams vary among networks.

MTV’s programming decisions are usually made on a local channel level. MTV

Taiwan usually has freedom from MTV Networks Asia when deciding programming (S.

Chang, personal communication, July 26, 2006). However, Cartoon Network Taiwan is

often not given freedom of choice by Cartoon Network Asia/Pacific when deciding

programming, though they can provide suggestions for programming (G. Chou, personal

communication, July 25, 2006). This is also the case with ESPN Taiwan, whose

programming decisions have to be approved by their regional headquarters, ESPN STAR

Sports (J. Chen, personal communication, July 24, 2006). Discovery Asia makes

programming decisions in consultation with local teams (J. Gibbons, personal

communication, August 29, 2006). Discovery Channel Japan’s programming, therefore, is

decided in the collaboration between the regional headquarters and the local team, but the

level of autonomy given to the local team is low (P. Luff, personal communication, March

17, 2006).

In essence, a regional headquarters usually wields an authority to exercise controls

over the programming on local channels, with the exception of MTV Networks Asia.

Programming decisions for local channels are finally made by the regional headquarters

with input from local representatives, but local teams usually are not allowed to exercise

their veto over the decisions. In this sense, the regional headquarters have established a structure of cooperative centralization at a regional level. The regional headquarters might

originally produce or acquire programs and provide them to their local channels. Or, they

might supply network programs to their local channels, taking into account some

advantages those programs would yield for the network. When local teams do not have

much autonomy in terms of their product offerings, network or regional programming

209 probably tends to be offered more on the local channels in keeping with the intention of

regional headquarters.

Market Entry Mode

The product policy at a local level would be affected by the choice of entry mode for the local market on the grounds that mode of entry determines the degree of control the

corporate headquarters can exercise over operations and strategies and the flexibility to

adjust to differences in market conditions. It is possible that more emphasis is placed on

programming adaptation strategies in joint-venture operations than in wholly-owned

subsidiaries.

MTV

MTV Japan is a joint venture between MTV Networks and a local investment firm,

while MTV Taiwan and MTV SAM are portfolios of MTV Networks Asia, a wholly owned

subsidiary of MTV Networks. The difference in ownership patterns might have a small

impact on local MTV’s programming. MTV Networks Asia sometimes has programs

sponsored by clients who want to reach to the whole Asian market. With the exception of

MTV Japan, all Asian MTV channels have to adopt those regional programs into the programming list (S. Chang, personal communication, July 26, 2006).

Cartoon Network

It is possible that the difference in ownership patterns leads to different amounts of

network programs on local Cartoon Network channels. Schofield (personal communication,

August 25, 2006) expects to show as many CNOs as possible on the channels owned and

operated by Cartoon Network Asia/Pacific, a 100% subsidiary of Turner Broadcasting. Yet,

Turner Broadcasting is basically not involved in the programming of Cartoon Network

Japan, a joint venture entity.

210 ESPN

ESPN SATR Sports and J Sports Broadcasting are ESPN’s joint ventures in Asia.

Both of them are given full autonomy to decide their product offerings from the network.

Only a small amount of network programs is currently offered on local ESPN channels owned and operated by these joint venture entities.

Discovery Channel

Discovery Asia is a wholly owned subsidiary of Discovery Communications.

Although the regional headquarters has the autonomy to program independently from the

corporate headquarters, network programs are commonly offered by local Discovery

channels owned and operated by Discovery Asia.

Cross case analysis

There could be a certain relationship between the market entry mode and the

programming on each local channel. Such regional headquarters as Cartoon Network

Asia/Pacific and Discovery Asia tend to prioritize network programs to be offered by their

own local channels. In spite of full autonomy given from their corporate headquarters in

terms of programming decisions, it seems that those wholly owned and operated, regional

headquarters show their fidelity to corporate headquarters by offering more network

programs on local channels.

Overall, it can be inferred from what has been discussed so far that each

U.S.-originated cable networks has unique business orientations with respect to foreign

operations. ESPN adopts a multinational approach, whereby programming products are

basically developed by affiliates, joint venture entities between the network and local

partners, with little dependence on the network for programming distribution. Content

resources are rarely shared within a network largely due to broadcast rights issues, and the

fragmentation of programming production or acquisition might lead to inefficiency at a

network level.

211 Discovery Channel and, to a lesser extent, Cartoon Network appear to have a global

orientation, whereby the world is viewed as a single market, and programming products are

often developed for the global market. A certain portion of local programming schedules is

actually devoted to programs distributed by the network on a global basis. The global-scale

efficiency with an emphasis on cost control, resulted from the pursuit of scale/scope

economies, seems to be a key part of their programming strategies. Yet, it should be noted

that both Discovery Channel and Cartoon Network also have a decentralized organizational

structure, which is a distinctive characteristic of multinational firms, whereby affiliates are

given more autonomy over decision-making on programming products. Indeed, Discovery

Channel describes their operation as “employing a multinational strategy that exploits

economies of scale and operational efficiencies” (Discovery Communications Inc., 2006b).

Finally, MTV takes a transnational approach, aiming to obtain both global efficiency and responsiveness to country-level operation through shared vision, flexible coordination, and integrated network of domestic resources. This interpretation may still lack conclusive evidence, as Hitt et al. (2003) point out the difficulty to implement a transnational strategy in reality. Yet, it can be safely said that MTV Networks is relatively more responsive to local needs than Discovery Channel and Cartoon Network while attaining more global efficiency than ESPN.

RQ9 assesses how intra-firm characteristics of U.S. cable networks are perceived to

influence the decision on programming strategy. Programming products certainly take shape

based on networks’ philosophy and orientation, including the cost-benefit consideration. For

instance, a network, which emphasizes cost control, tends to distribute a programming

product across markets, pursuing scale and scope economies, while another network, which

emphasizes sales, tends to adopt locally adapted products. Networks’ strategic approaches to

international marketing also determine how they leverage resources (e.g., whether a creative

idea transferred within a network is used for global programming or local programming)

212 and the degree to which autonomy in terms of programming decision is given to a local

level. Whether programming decisions are made at a regional level or at a local level could

influence what programs are offered in a local market. If a regional headquarters, which is a

wholly owned subsidiary of a network, exercises controls over the programming on local

channels, network programs or regional programs could be offered more by local channels.

Overall Results

Infusing the theoretical framework found in the international marketing literature

with findings in the current chapter, Table 5-2 is presented as a result table to illustrate how

determining factors, which have been discussed thus far, are perceived to exert effects upon

television programming offerings by U.S.-originated cable networks. As addressed in RQ1,

each of U.S.-originated cable networks has unique programming strategies. As a final

analysis, what factors possibly have strong impacts on their programming decisions is

described below.

MTV

Approximately 80-90% of the programming schedule of both MTV Japan and MTV

Taiwan is taken up with locally produced shows, while the ratio is lower on MTV SAM.

MTV Networks basically employs the local adaptation strategy for their programming products, giving top priority to the demand or taste of their target audience in local markets.

Although music programming might be a genre with relatively less cultural sensitivity, and some of network programs certainly have universal appeal, it is considered difficult to create a program that will be successful in multiple markets. In fact, many of network programs are currently not popular in Japan and Taiwan. In addition, relatively small production costs necessary for local production and a typical format of music programming give the network an advantage to pursue the localization strategy. MTV also believes that locally adapted programming would often yield more revenues than network programming.

In terms of intra-firm factors, programming decisions are made by the autonomy of local

213 MTV channels in view of specific local market characteristics, due to a decentralized

authority within the network. The network has established a mechanism to transfer ideas or

know-how across markets, and this is a huge plus to the local adaptation strategy, as an idea conceived to succeed in the local market is actively adopted in order to localize programming.

Meanwhile, at least a few network programs are offered by local MTV channels,

since the network believes that the success lies in finding the right balance between the

international and the local programming mix, rather than offering exclusively the local

programming. The potential of some music programming to appeal universally and

transcend national boundaries, along with the contractual advantage, could motivate local

MTV channels to provide standardized music programming. Network programs are also

important for local MTV channels to differentiate themselves from domestic rival channels.

Besides, it is MTV’s philosophy to introduce cutting edge music usually from the West to

local markets as a trendsetter. Network programs might play an important role to materialize

the philosophy.

Cartoon Network

CNOs account for 18% of Cartoon Network Japan’s programming, 30% of Cartoon

Network Taiwan’s programming, and 60% of Cartoon Network Southeast Asia’s

programming. Cartoon Network aggressively distributes their original animated series on a

global basis. This is partly because the network believes that animation is often less

culture-bound, and partly because some CNOs, which are believed to be made from a global

perspective, could have universal appeal. In addition, it usually requires high costs to

produce original animations for a local Cartoon Network channel. It is also supposed that

there is a commercially sufficient audience segment to support CNOs across national

markets. It is commonly considered that CNOs should be offered by priority so that local

Cartoon Network channels can be a member of the network, and the network can reinforce

214 their global brand. In terms of the utilization of resources, CNOs provide the network with

merchandise opportunities. Cartoon Network has a regionally centralized authority,

whereby the final decision on programming is made by the regional headquarters, a wholly

owned subsidiary of Turner Broadcasting, which often expects their local channels to offer

CNOs, although this is not the case with Cartoon Network Japan.

Meanwhile, some factors are perceived to drive Cartoon Network to adopt local

adaptation. Some animated programs, usually those based on dialogues, are considered culturally sensitive and unsuitable for specific markets. Locally adapted programming is adopted by Cartoon Network Taiwan to differentiate themselves from a global rival, Disney

Channel, and to compete a domestic animation channel, while Cartoon Network Japan

features CNOs to differentiate themselves from their domestic animation channels in Japan.

ESPN

Programs from ESPN occupy a very small part of the programming of Asian local

ESPN channels. The network only supplies those channels with a small amount of programs

for which the broadcast rights necessary for telecast in a local market are already acquired.

Mainly for this reason, ESPN has substantially no choice but to pursue the local adaptation

as their programming strategy in Asian markets. Another reason is that in spite of the

possibility of certain sporting events to cut across boundaries of language and culture, tastes

for sports basically vary from country to country and region to region. Overall, ESPN’s

sports programming might basically be a business based on a local and regional appeal.

Their localization strategy is also driven by the stiff competition from a local sports channel

in a market such as Taiwan.

In a more precise sense, however, it might be more adequate to view their

programming strategy as regionally standardization rather than local adaptation. ESPN

STAR Sports, a joint venture entity of the network, often distributes the same programming

to their local channels. ESPN STAR Sports has autonomy from ESPN in terms of

215 programming decisions, while also exerting an authority in the close relationship with local

channels, which are owned and operated by them and viewed as outlets for ESPN STAR’s programming in local markets.

Discovery Channel

The programming of local Discovery channels is in large part accounted for by

programs supplied by the network worldwide. There appear some distinct reasons, which

drive the network to adopt global standardization strategy. It is believed that the appeal of

their network programming is universal, since documentary programming is often culturally

neutral, and a significant number of viewers are clearly interested in seeing what happened

or is happening in the world across a wide range of topics. Showing universally appearing

topics is actually a key concept underlying Discovery’s programming strategy. The network

also has a sufficient volume of intermarket audience segment attracted by their standardized

programming. Additionally, Discovery’s programming may not be affected much by the

competitive situation, as they are the leading network of documentary programming

worldwide, and local competitors are rare in many markets. Although their production costs

are usually high, by distributing the same programming products to markets as many as

possible, Discovery Channel could achieve substantial economies of scale and operational

efficiency. It is also pointed out that local Discovery channels should offer the same

programming to some extent in order to protect the network’s global brand. Programming

on local Discovery channels is decided in the collaboration between the regional

headquarters, a wholly owned subsidiary of the corporate headquarters, and the local team,

but the level of autonomy given to the local team is low.

216 Table 5-1. Ratio of network programming on each local channel’s schedule. MTV Networks MTV Japan MTV Taiwan MTV SAM 10-20% 10% 60% Cartoon Networks CN Japan CN Taiwan CN SEA (CN) 18% 30% 60% ESPN Sports-i ESPN ESPN Taiwan ESPN Asia Very small Very small Very small Discovery Channel DC Japan DC Taiwan DC SEA (DC) Very large N/A 60-70%

Table 5-2. Direction of networks’ programming product by determinants. MTV Cartoon Network ESPN Discovery Channel Ratio of network Depends on Depends on Low High programming market market Typical methods Original local Selection based Original local Selection based on for local production on local production local preference & adaptation preference & language language customization customization Cultural Music: Low Low Low Low sensitivity of …Standardization …Standardization …Standardization …Standardization product Reality show: High …Adaptation Universal appeal Depends on artists Depends on Depends on Depends on topics of product featured animations but sports genres but usually high usually high …Standardization …Standardization Typical Low High Depends on High production costs …Adaptation …Standardization games …Standardization Typical Easy to modify Hard to modify Unknown Some are easy to programming …Adaptation …Standardization modify format Size of Small Large Unknown Large intermarket …Adaptation …Standardization …Standardization audience segment Country’s cultural If similar, standardization is feasible. environment Country’s Unknown if standardization is feasible between economically similar markets. economic Strong local economy drives local production. →Adaptation condition Country’s Unknown if standardization is feasible between physically similar markets. physical condition Country’s legal Little regulation …Standardization environment

217 Table 5-2. Continued MTV Cartoon Network ESPN Discovery Channel Country’s Unknown if standardization is feasible between markets with similar infrastructure/ infrastructure. supporting sector Availability of global marketing structure …Standardization Advertisers & MVPDs prefer either standardization or adaptation. Competitive Intensive Intensive Intensive Less intensive intensity competition competition competition competition …Adaptation or …Adaptation or …Adaptation …Standardization standardization standardization Competitors Domestic rivals Global rivals Domestic rivals Global rivals …Adaptation or …Adaptation …Adaptation …Standardization standardization Domestic rivals …Adaptation or standardization Brand Global brand Global brand Unknown Global brand …Adaptation or …Standardization …Standardization Standardization Country of origin Small Large for Small Small effect of the U.S. preschooler programs Business Transnational Global Multinational Global orientation …Adaptation or …Standardization …Adaptation …Standardization standardization Cost-benefit Sales conscious Cost conscious Cost conscious Cost conscious consideration …Adaptation …Standardization …Standardization …Standardization Resource Property-based Property-based Little Property-based …Standardization …Standardization property-based …Standardization Knowledge-based Knowledge-based …Adaptation Knowledge-based …Adaptation …Standardization …Standardization Centralization/ Decentralization Regional Regional Regional decentralization …Adaptation centralization centralization centralization in …Standardization …Regional …Standardization decision-making standardization Market entry Greenfeld or joint Greenfeld or joint Joint venture Greenfield mode venture venture …Adaptation …Standardization …Adaptation …Standardization

218

Conceptual phase Making programming relevant to a particular market Meeting the needs of local target audience

Practical phase

Translation Local Remake of Locally

into local production programs produced, language via with the produced by original dubbing or insertion of the network, programming subtitling materials and keeping the with its own footages idea and ideas and supplied by concept materials and parent network unchanged footages

Less adaptation Full adaptation

Figure 5-1. Continuum of television programming localization.

Viacom

MTV Networks (100% Subsidiary)

Network MTV

MTV Networks Asia MTV Japan (100% Subsidiary/Regional headquarters) (Joint venture) Channels MTV Taiwan Channel MTV Japan MTV Singapore & Malaysia (SAM) MTV China

MTV India

Figure 5-2. Ownership structure of MTV.

219

Time Warner

Turner Broadcasting (100% Subsidiary)

Network Cartoon Network

Turner Entertainment Networks Asia Japan Entertainment Network [Cartoon Network Asia/Pacific] (Joint venture) (100% Subsidiary/Regional headquarters) Channel Cartoon Network Japan Channels Cartoon Network Taiwan Cartoon Network Southeast Asia Cartoon Network India Cartoon Network Philippines Cartoon Network Australia/New Zealand

Figure 5-3. Ownership structure of Cartoon Network.

Disney Hearst

ESPN (Joint Venture)

Network ESPN

ESPN STAR Sports J Sports Broadcasting (Joint Venture/Regional headquarters) (Joint venture) Channels ESPN Taiwan Channel Sports-i ESPN ESPN Asia ESPN Hong Kong

MTV India

Figure 5-4. Ownership structure of ESPN.

220

Liberty Media Cox Advance/Newhous John Hendricks

Discovery Communications (Joint venture)

Network Discovery Channel

Discovery Asia Discovery Japan* (100% Subsidiary/Regional headquarters) (Joint venture)

Channels Discovery Taiwan Channel Discovery Japan

Discovery Southeast Asia Discovery China

Discovery Australia/New Zealand

*: Discovery Japan is a 50:50 joint venture between Discovery Asia and a Japanese firm.

Figure 5-5. Ownership structure of Discovery Channel.

221 CHAPTER 6 CONCLUSIONS AND DISCUSSION Findings

A main objective of the current study is to shed light on the programming product

offered by U.S.-originated cable networks in Asian markets, along with what factors are

perceived as determinants of programming decisions by those networks. The present study

was premised on the assumption that only executives and managers in charge of

programming of U.S.-originated cable networks in Asian markets could explicate the

rationale behind the programming strategies in a real-life context. On the basis of theoretical

foundations found in international marketing of products, the study was intended to provide

a framework for understanding how various external as well as intra-firm factors could

affect the programming strategies.

Overall, networks sampled for the present study fully understand the significance of

programming products adapted to individual local markets. Given the fact that viewers

generally prefer products more relevant to them, the locally adapted programming is

important for U.S.-originated cable networks, providing networks with greater strategic

flexibility in programming arenas. Yet, in light of actual programming product offerings, it

was found that each of U.S.-originated cable networks employed unique programming

strategy in Asian markets. While some networks attempt to distribute the same

programming on a global scale, others encourage local teams to develop more localized programming. Even within a network, some variances in programming strategies were found among local channels. In essence, programming strategy significantly differs among networks and among markets. Although all networks, which have expanded internationally,

realize differences in local market preferences and, hence, the significance of a national

market-based approach, they are not engaged exclusively in the locally adapted

programming.

222 Indeed, programming at a local channel level always consists of some network programs along with some local programs. In this regard, as the international marketing literature suggests, the choice of standardization and adaptation are not mutually exclusive but a matter of degree, and the possibility for each programming strategy is situation-specific. A variety of external and intra-firm factors, which can affect the degree of product standardization/adaptation, are roughly grouped into the followings: product characteristics, target market segment, country’s cultural characteristics, country’s environmental characteristics, industry competition, brand and country of origin, and firm characteristics. While these factors, which were commonly identified by international marketing studies, were in large part consistent with those perceived to influence programming strategies employed by U.S.-originated cable networks in Asia, some other potential determinants were found in the present study.

Product Characteristics

The feasibility of product standardization or adaptation would vary with the nature of the product, in particular with its cultural sensitivity. Television programming is often referred to as cultural product, whose appeal could vary across cultures, and hence the acceptance of television programming is bound by culture. More precisely, different program types or genres could have various degrees of cultural sensitivity and ability to cross national boundaries, which would eventually entail different programming strategies by networks. For instance, such program types as animation and documentary are likely to be more easily understood in different cultural contexts in comparison with other types of programs. In addition to the cultural sensitivity, the program type could also affect the degree of program standardization/adaptation for the reason that programming formats and costs necessary for producing original local programming differ depending on the type.

Programming types, which typically require large costs to produce or have a format that cannot be easily modified or remade, are potential candidates for standardization.

223 It was also uncovered that programming products with universal appeal, such as those featuring internationally known people, characters, and events, require little adaptation across markets. In fact, some U.S.-originated cable networks have increasingly tried to make such programming products at a network level, taking into consideration universal appeal for the worldwide audience. Yet, the amount of universally appealing programs differs among networks, whereby eventually leading to the difference in the ratio of programs supplied by the network to local channels. Although some U.S.-originated cable networks try to produce programs based on the global perspective so as to be accepted universally, whether or not such production is feasible remains unsettled. In reality, most of programs distributed on a global scale by U.S.-originated cable networks are still produced by the initiative of the corporate headquarters in the United States, based on the U.S. perspective.

Target Market Segment

The success of standardized programming products premises the presence of

intermarket audience segments at which the network can target their programming products.

To be sure, there exist intermarket audience segments, which share similar preferences for

television programs and thus are regarded as a contributor to the success of standardized programming. As noted previously, the segment in a country market might be small but can be served aggregately and profitably if it exists in multiple country markets. The point is whether or not a network considers that viewers fell into the segment are large enough across markets. Under the present circumstance, some networks identify and target intermarket audience segments, but others do not. It should be carefully watched if audience markets would further converge worldwide and the global audience markets for standardized programming products would become larger

224 Country’s Cultural Characteristics

The national market characteristic can be an important driving force behind the

implementation of a certain programming strategy. Programming products are in principle

introduced when they seem to fit in a marketplace. Cultural similarity and compatibility

between home and host country markets are associated with the high feasibility of

standardized programming. In spite of the diverse cultural patterns present in different Asian

countries, some similarity in terms of viewing preference could be found between

individual country markets, which are culturally proximate with each other. As some Asian countries share relatively similar cultural values between them, the same programs could be distributed successfully across those countries. Meanwhile, given the fact that many programs, which are distributed within a U.S.-originated cable network, are still made in the

United States, it is plausible that those programs would be more favorably accepted in country markets whose cultures are proximate to American cultures.

Additionally, some other cultural characteristics of an individual country may have

an impact on programming offerings in the country. As seen in the case of Singapore,

cultural diversity and heterogeneity in a country could be reflected in a variety of

viewpoints, and people in the country would be more open-minded to foreign or alien

elements, respecting the values of people from different cultures. In contrast, people in a

country with cultural homogeneity or insularity might be more exclusive to different

cultures. Another important national characteristic is whether people seek the authentic

foreign product or the domestic copycat product. In some Asian countries, Western cultural

products have served as a model for emulation and, in fact, successfully been indigenized,

as seen in the example of pop music. In a sense, many media firms in Asia have deliberately

adapted Western, in particular, U.S. popular cultural genres into more localized forms. It

was found in the current study that localized Western media products are often preferred by

Japanese and Taiwanese viewers, while Singaporean viewers often like the original, real

225 ones. Finally, the bilateral historical relationship or the traffic of people between two

countries could influence the trade of cultural products including television programs

between those countries. It should be noted that sample markets for the present study have

formed close ties with the United States for many years as pro-U.S. nations.

Country’s Environmental Characteristics

There is no consensus regarding the impact and importance of environmental

differences, such as those in economic conditions, physical conditions, legal environments,

and infrastructure and supporting sectors, on programming strategy. Meanwhile, the

economic condition and supporting sectors in an individual country affect programming

strategies at a local level. If the size of an individual national market is large in terms of

both population and wealth, coupled with the strong production capability in the country,

the incentive to develop original programming products in the market would increase.

Additionally, local channels of U.S.-originated cable networks can increase their local

programming as advertising revenues and multichannel subscribers increase. As for the

influence of regulations on programming, global television networks owned by TNMCs

might be the greatest beneficiary of the deregulation in multichannel programming

industries in many parts of the world. The strict rules, such as import quotas, which are

applied to broadcast networks, often have no application to cable networks owned by

foreign firms.

Industry Competition

The competitive situation would affect programming strategies of U.S.-originated

cable networks. On the one hand, U.S.-originated cable television networks adjust their products to better meet needs and wants of local markets so that they could survive in the competition. On the other hand, these networks offer more or less network programs containing international flavors in order to differentiate themselves from domestic channels.

Although it is difficult to find definite principles behind how the industry competition

226 influence their programming strategies, it can be presumed that the networks adopt

programming adaptation in competitions with a singular domestic rival but try programming differentiation in more intense competitions with multiple domestic rivals,

utilizing standardized content. Besides, programming products would be successfully

standardized if a network enjoys a leading market position across countries.

Brand and Country of Origin

U.S.-originated cable networks are often associated with a global image by Asian

audiences. The global image, which might be often perceived to be superior in quality by

consumers, would be necessary for those networks, since they may be still unfamiliar to

many viewers in countries outside the United States. Yet, the degree to extent the global

image appeals to viewers could vary depending on country’s cultural characteristics.

Countries in which foreign brands are widely accepted would provide a more favorable

context for the introduction of standardized products. It is also noteworthy that the

successful execution of brand standardization at a global basis does not always facilitate the

acceptance of network programming, but it is true that U.S.-originated cable networks could

maintain and reinforce a consistent global brand image by offering a certain amount of

network programs.

The country of origin effect is achieved successfully only when the images of the

product and its country of origin are positively related by the targeted audiences. The

country of origin of a television program is generally not perceived to have much influence

on audience preference by U.S.-originated cable networks. Nonetheless, it should be noted

that the effect could differ, depending on the national and demographic characteristics of audiences as well as the type of programming. In this sense, the country of origin effect should be a function of cultural and product-related factors. Specifically, particular countries tend to be preferred as original countries of animated programs. Animations originating in Japan are popular worldwide, while parents in some Asian countries want to

227 have their children watch American animations in English. As far as many viewers have a

positive image of animations made in those countries, country of origin has a certain effect

on viewers’ selection and evaluation of animated programming products. It is also inferred

from the universal popularity of animated programs from a couple of specific countries that

animation is relatively less culture-bound and currently made only in a limited number of

countries.

Firm Characteristics

The current study is unique in that it focuses on the relative significance of

intra-firm factors as determinants of programming strategies by U.S.-originated cable

networks. As programming is finally decided by a network, it was supposed that

characteristics inside the network would affect their programming strategies. First, different

and distinct orientations and philosophies with respect to international operations are

reflected in different programming strategies. An example is the difference in cost-benefit

considerations, which results in different programming strategies. U.S.-originated cable

networks are likely to face the trade-off between cost savings accruing from programming

standardization, a prominent nature of television programming product, and the potential

sales opportunity resulting from adapting products to local tastes. The economies of scale

and other cost savings that might accrue from standardization are of value for some

networks but not necessarily for others. Although all the networks should emphasize profit

maximization as an ultimate goal, whether they are more cost-conscious or have a more sales-orientation has an impact on their programming strategies.

What strategic approach, namely, international multinational, global, or transnational approach, is employed by a U.S.-originated cable network is in large part dependent on what resources are possessed by the network. Property-based resources, such as financial or

content resources, are utilized on a network basis. Meanwhile, it was found that

U.S.-originated cable networks have established a mechanism to coordinate and transfer

228 ideas and know-how, i.e., knowledge-based resources, within a network. This mechanism appears to be especially essential in the production and marketing of the content by global television networks, because of the creative characteristic of television programming products. U.S.-originated cable networks can benefit from creative sharing, as ideas, knowledge, and experience are exchanged between headquarters and local teams to produce global programming products or to modify existing programs for different markets with the basic ideas unchanged.

Additionally, the decision-making structure within a U.S.-originated cable network shapes what product is offered for audiences in local markets. In fact, the trend in many

U.S.-originated cable networks is to decentralize and delegate decision-making power and responsibility to the affiliate level. Then, decisions as to whether or not network programs are offered in local Asian markets are substantially made by affiliates, rather than being urged by the corporate headquarters. Meanwhile, many local Asian channels are owned and operated by regional headquarters, which are usually set up as wholly-owned subsidiaries, and the degree of autonomy given to each local team varies among networks. While largely realizing the necessity to adapt programs based on inputs from local managers, some regional headquarters make programming decisions that conform to the corporate headquarters’ intentions and expectations. Indeed, some regional headquarters assert that a certain amount of network programs must always be offered on their local channels so that the network could maintain the brand identity on a global basis, while at the same time pursuing economies of scale and scope obtained from those programs, not undermining the advantages of a global television network.

Final Thoughts

In spite of the necessity of locally adapted programming, which has been emphasized by media globalization scholars, it seems that some U.S.-originated cable networks still desire to distribute the same programming to their local channels as much as

229 possible, believing that where television programs are concerned, at least some elements

could be both fundamental and global. Much programming currently offered by

U.S.-originated cable networks in Asia is actually neither completely standardization nor completely adaptation but a hybrid of global and local programs. This hybridization is considered necessary for them to attract more local viewers while maintaining their global brand image and attaining cost savings. While taking into consideration local tastes, Asian

local channels of U.S.-originated cable networks would never become as local as their

domestic counterparts, because they often seek the relevance to local audiences within a

global context. In reality, the key issue with regards programming strategies for

U.S.-originated cable networks might lie in achieving the right balance between global and

local programming products, or more precisely, complementing global programming

products with local ones.

It was impressive that an executive interviewed for the current research articulated

that if the number of viewers can be increased by offering network programs, then he would

raise the ratio of those programs. If standardized programming products seem to be

successful in overseas markets, networks do not need to bother developing different product

lines for local markets. Global television networks first seek out opportunities to implement

the same programming strategy and, if the standardized programming product does not

appear to become successful, adjust the product.

As seen in Figure 2-1, several factors were perceived to determine the direction of

product standardization or adaptation. On the basis of the international marketing

framework, the current studies found that certain television programming strategy could be

facilitated by each of sample networks in specific contexts, as summarized in Table 5-2. The findings provide some insights into the implications of the framework for international television programming strategies, along with its usefulness as a guideline for programming

decisions, as noted under the next subheading. In particular, what factors favor a

230 standardization strategy should be highlighted here, as global television networks usually

takes into consideration the feasibility of programming standardization first. Again, the

networks might alternatively think the local adaptation when standardization seems

unfeasible. Figure 6-1 illustrates a conceptual framework for understanding the factors that

drive global television networks to offer standardized programming products, based on the

findings discussed so far.

Managerial Implications

The presentation of specific normative prescriptions for practitioners is not the

primary objective of the current study. However, it is beneficial to note several guidelines

for formulating programming strategies, which can be drawn from the research findings.

After a first glance at the findings, one might be tempted to conclude that differences in the cultural context will have absolutely important de-standardizing implications for programming practice. Yet, programming standardization is still worth trying for global television network, because it leads to cost savings, although this clearly does not imply that

all the programming products should be uniform across countries. Standardization of

television programs may be financially successful in some product categories and across

some market segments but not in others. Instead of standardizing all the programming

products, a more practical approach would be standardizing wherever it is possible,

balancing the cost effectiveness and greater consumer responses. In light of the need for

cost-efficiency with standardization on the one hand and the large number of differences in

consumer preferences on the other hand, television programming strategy needs to be

carefully determined via a cost-benefit analysis. In essence, a network’s decision should be

based on estimated overall costs and revenues. Standardization works on the cost side of the

profit equation, while local adaptation might be necessary in order to obtain more revenues,

which would otherwise fail to materialize. The net profit resulting from the interplay

between lower cost and greater revenue is what ultimately matters.

231 Then, the key to success is a careful analysis of the forces driving toward the

standardization of television programming products as well as the obstacles to this approach.

It has been well established in the strategic management literature that the fit between both

external and internal factors and the strategy has positive impact on performance (Cavusgil et al., 1993). As far as the positive relationship between performance and factor-strategy fit is true, the following guidelines are useful to programming managers. First, propositions based upon the contingency framework may start with the specification of the product characteristics in terms of how the programming product will actually be perceived by audiences. If some programming products appear to be less culture-bound and have universally appealing characteristics, global television network should distribute them as widely as possible.

Second, distributing programs on a global basis certainly offers opportunities for

capitalizing on economies of scale, provided that there is sufficient convergence among

audiences across national markets. In today’s increasingly competitive television market,

the international audience segmentation is essential to the survival of global television

networks, which attempt to reap the advantages of programming standardization. Thus, it

should be assessed if there is a worldwide potential market segment for a given

programming product. The identification of a segment of audiences who do not differ across

countries in terms of their preferences of programming is an opportunity for global

television networks to apply the positive recommendations for standardized television

programming.

Third, it is important to identify the effects of an individual country’s cultural

characteristics on audience preferences, as they are important indicators of audience

segments and market potential. Some preferences are likely to be universe, whereas others

are not. Then, programming managers must understand the extent to which audience

preferences vary from one culture to another. Actually, several culture-specific preferences

232 were detected in sample markets for the present study. It is quite probable that there still

exist cultural differences among national markets in varying degrees and that these

variances have implications for programming decision that would be optimal. From a

managerial point of view, therefore, the complexities associated with serving culturally

diverse national markets should be bore in mind, perhaps even with what appear to be

relatively culture-free programming products. Global television networks should use their

knowledge of a particular market’s national culture to develop successful television

programming strategies.

Fourth, variances in firm characteristics are important explanatory variables as well.

In general, the advantages and disadvantages of a particular orientation vary considerably with the individual firm’s resource and the size of potential overseas markets. These affect the costs and benefits associated with each strategic approach and thus its desirability to the firm. For example, given a global television network with an appealing programming content, the return on the resource would be maximized worldwide when it is utilized and deployed in various geographical markets. Then, it might be unfeasible for the network to employ multinational approach.

Another important consideration is whether a global television network has centralized decision-making process. Central control of global operations is a necessary

requirement for achieving a high level of standardization. A distinction, however, must be

made between centralization of authority in the networks and rigid implementation of

standardization. Successful global television networks might seek input and ideas from

throughout their affiliates and local channels and typically do not dictate strategies in a

top-down fashion. A bottom-up rather than top-down approach would foster greater

commitment and produce superior programming at a global level. Meanwhile, in the

decentralized structure, local channels might be permitted to develop original programming

that can be better respond to the specific needs of local audiences on the basis of local

233 knowledge. For instance, MTV Network has granted local teams the right to develop new

programming products, which is a powerful way to eventually generate new ideas for the

whole network. These local programs could be transformed into successful global programs

at a later point. It should be noted that there is a clear trend among global television

networks toward establishment of mechanism for the transfer of creative ideas and

information. It is also noteworthy that providing local teams with the opportunity to produce

local programs has an impact on the teams’ motivation and skill level.

Finally, global television networks should emphasize that they are global brands.

The global image is significant for the networks not only because it could be associated with high quality by audiences but also because it helps local channels of the networks differentiate themselves from domestic channels. The actual problem in many country markets, however, is that even though viewers could be drawn to global brands as symbols, when it comes to actual content, they might look for something more relevant to them.

Some global television networks might take pains to maintaining strong, single global brands, while at the same time making the programming locally relevant. Certainly, as found in the present study, some standardized programs should be offered across national markets to maintain brand consistency and integrity on a global scale. However, the global brand image is also able to coexist with locally adapted programming, for example, by

incorporating global materials into locally produced programs, that is, by digesting global

elements into the local contexts, or by keeping the right balance between local and global

programming products. In ether case, it should be recommended that global television

networks encourage the development of programming portfolios that combine a balanced

number of strong local as well as global programs so that they could mix and match these

programs in a flexible manner to accommodate prevalent tastes in different countries.

234 Contributions of the Present Study

Despite a great deal of discussion worldwide about media globalization, relatively little research has been conducted on the actual decisions and behaviors of media firms in foreign markets. In particular, it seems that little academic research has discussed the issue of media product offerings in overseas markets from management perspectives. For instance, little has been known about the extent to which programming products are actually standardized or locally adapted in practice, as no studies have systematically examined programming products by global television networks. Given the paucity of research into this discipline, this study sought a comprehensive understanding of the television programming strategies of those networks.

It seemed that knowledge would be certainly obtained from what practitioners do and think, since they have been engaged in the international programming practices and hence developed their own understanding of the discipline. In fact, as a reflection of the experience and perceptions of executives and managers at U.S.-originated cable networks, the findings in the present study are valid and offer specific examples to be added to the literature on global media management studies. The value of this research lies in the insights, which gives into the key factors that affect programming strategies by global television networks. It is hoped that the analytical framework, which was proposed and validated in the current study, forms the basis for future studies of scholarly nature, directing further attention to the relationship between programming products by global television networks and key variables.

Moreover, the present study possibly provides a starting point in helping not only academics but also practitioners theoretically consider programming strategies in today’s increasingly competitive global television arena. Given the nature of the samples and their size, no definitive conclusions can be clearly reached. However, the current study provides some interesting insights about how a given factor could exert influence on programming

235 product offerings. For executives and programming managers, it is necessary to analyze the external and internal environments to assess the extent to which programming products could be standardized or locally adapted. From this analysis, they could possibly weigh the advantage of standardization against any disadvantages, selecting the most appropriate strategy. It is hoped that the propositions developed in this study will help them gain a better understanding of the opportunities for standardization or local adaptation of programming in the future.

Limitations and Future Research Directions

The present study has several limitations, which also provide interesting avenues for future research. As often pointed out, case studies often lack scientific rigor. The case-based approach usually addresses issues within the interpretivist paradigm rather than the positivist paradigm, and this possibly allows the researcher’s biased views to influence the findings and conclusions. Indeed, the current study used executives’ and managers’ perceptions to operationalize many of the variables in the framework. It was expected that because of the executives’ or managers’ key positions, their responses reflected the strategic choice of their respective business. Yet, little hard evidence is evident. Even though research questions in the current study are principally concerned with perceptions, the authenticity of information might be hard to be verified. While the use of retrospective perceptions for organizational research has been found to be actually reliable and valid (Cavusgil et al.,

1993), the findings can be strengthened with more objective data and through alternative measurement approaches.

Executives’ and managers’ opinions are in large part based on assumption, rather than on the motives and beliefs of the viewers. A further research to assess the perceptions and attitudes of viewers to programming products as well as brands would be necessary to validate the findings of this study. In particular, much information is still needed in the area of

236 intermarket audience segments. The analysis and discussion in this study are likely to provide important direction for international audience behavior research.

The present study examined programming strategies from the perspective of Asian affiliates and local channels of U.S.-originated cable networks. Some statements by executives at the corporate headquarters of the networks (MTV Networks, Discovery

Communications, etc.) were obtained from the secondary sources. However, future studies might extend this study to incorporate the perspective of those people through original interviews so that data obtained from executives or managers at regional and local levels in the current study could be evaluated in a more relative and comprehensive manner. It might be interesting to explore how corporate executives perceive the current trend in which programming strategies are mainly decided by their affiliates.

Case studies are not amendable to generalization, even though the generalization of findings is not necessarily the aim of the studies. The fact that only a small number of cases

(four U.S.-originated cable networks in three Asian markets) were examined in the current study obviously lessens the generalizability of findings. Sample networks and markets were selected based on purposive criteria. Yet, some important networks, such as HBO and Disney

Channel, and some important Asian markets, such as China and India, were not considered in the current study, since the number of cases examined was inevitably constrained by time and funding. Therefore, an important direction for further research is to replicate this study in different networks and different Asian markets to further deepen our understanding of the reality of programming strategies employed by global television networks. Additionally, the study could also be replicated in the context of Europe or Latin America, and the results from those regions would then be compared with the present research findings in Asia. More insights regarding the programming strategy of global television networks could be gained through these research streams.

237 A new attempt was certainly made in the current study, which seeks its theoretical

base in the international marketing. While this qualitative study has proved rich insight

about four U.S.-originated cable networks, nevertheless, definitive conclusions and

generalization of the research results might hardly be reached, given the nature and size of the samples. To achieve this, a larger sample size and multiple indicators for all factors should be sought. It will be necessary for researchers to discriminate between inductive and deductive research but, at the same time, clearly recognize the synergy between two

(Bradley, 1987). In fact, the case study is often carried out as an exploratory first step that paves the way for further research, as well as offering a greater depth of information to complement the quantitative survey results. Applying the framework proposed in the current study, continuous study might systematically analyze a larger group of global television networks through surveys in an attempt to empirically assess which of the factors is more important for global television networks to consider in the programming decision. For instance, mail surveys of programming managers in local offices of the networks might be conducted to gather quantitative data. Then, multiple regression analysis would show the linear association between programming standardization/adaptation and internal and external factors. Such knowledge will help firms incorporate the most important factors early in the programming developing process.

This study did not directly assess the performance of a certain programming strategy,

although this has recently become a major concern in the international marketing arena.

From the standpoint of television networks, better programming might ultimately be programming yielding better financial performance, which is indicated by return on investment/assets or sales growth, regardless of whether it is globally standardized or locally adapted programming. If this is true, then the networks’ concerns might lie in areas such as which programming assures higher profits, rather than in the study of factors perceived as determinants of the programming strategy. It is still uncertain whether or not

238 the scale effects and lower costs commonly associated with standardized programming lead

to increased profitability. Rather, product adaptation might strengthen the product’s

competitive position in the marketplace and eventually lead to higher sales. Moreover, it is

also required to verify if significant advantages actually accrue to the network adopting the

local adaptation, not only in terms of sales but also in terms of profit. This kind of proof is

not yet available. Since the ultimate relevance of such a strategy depends on its performance

outcome, future research could link the standardization or adaptation strategy directly to

financial performance. The strategy-performance relationship can be investigated by a

longitudinal design spanning several years of the ventures, thus gaining a richer

understanding of the dynamics and complexity of the relationship.

Ideally speaking, cross-national research including the present study should be done

in a cooperative manner by several researchers, each of whom is a native in and familiar

with the countries under examination. This is because each researcher could work in his or

her own country market and consequently gather and interpret the data within a local context. By doing so, the research could avoid several critical problems. First, interviews

can be conducted in native languages for both an interviewer and an interviewee, increasing

the chance to access deeper and more nuanced information. Listening to people speaking a

language other than their mother tongue is sometimes fatiguing and demands extreme

concentration. Second, useful secondary sources are often available only in local languages.

While information from interviewees should be complemented with secondary source data,

relevant data in English was not always available for the present study. It would be

necessary to look at data available only in local languages for the purposes of completing

more thorough research.

Finally, it seems necessary to continuously explore the programming strategies that

global television networks might employ in the future, as they are expected to change with the times. Again, when initially entering foreign markets, U.S.-originated cable networks

239 typically offer U.S.-made programs with little customization. Over ten years later, they have shifted to offering more or less locally adapted programming in each of overseas markets.

The next issue is what will become of this trend over the long term. Some of the global television networks might choose to include local elements in programming products. This would represent strategic advantages and thus are continuously worth consideration for networks to take a “middle-of-the-road” approach. Meanwhile, if further convergence among viewers across country markets would occur, and if global audience markets would emerge and grow to an adequate scale, it might be an opportunity for global television networks to develop and market programs, which would be offered on a global scale.

240 Host country’s cultural characteristics Firm characteristics - Similarity with home country’s culture - Global orientation - Common language - Desire to maintain to global brand - Diversity and heterogeneity image - Open attitude toward foreign products - Emphasis on cost reduction/synergy - Seeking authenticity associated with standardization - Historical tie & active people exchange - Content resources with home country - Affiliates’ royalty toward corporate headquarters

Standardized programming

Product Target Host country’s Industry Brand and characteristics market environmental competition country of - Programs of less segment characteristics - Weak origin culture-bound - - Less developed competition - Global genres Presence economy - Intensive brand - Programs with of - Less developed competition and - Home larger production audience supporting the necessity for country costs segment sectors differentiation prestige for - Programs with a across - Fewer - Leading certain format not easily national regulatory market position program modified markets constraints across markets type

Figure 6-1. Framework determining networks’ programming standardization

241 APPENDIX A LIST OF INTERVIEWEES

MTV Yu Sasamoto, president and CEO, MTV Japan Tetsuya Togawa, vice president, research and planning, MTV Japan Sharon Chang, director, creative and contents, MTV Taiwan Mishal Varma, senior vice president, programming, music, and talent, MTV Networks Asia

Cartoon Network Michiko Hashida, associate director, corporate public relations, Japan Entertainment Network (Cartoon Network Japan) Shinji Suetsugu, director, programming department, Japan Entertainment Network (Cartoon Network Japan) Gary Chou, program manager, Turner Broadcasting Sales Taiwan (Cartoon Network Taiwan) Michele Schofield, director, programming and acquisitions, Turner Entertainment Networks Asia

ESPN Ichiro Hase, manager, planning and control group, J Sports Broadcasting Corporation (Sports-i ESPN) Jammie Chen, marketing senior manager, ESPN STAR Sports (ESPN Taiwan) Nick Wilkinson, vice president, programming—South East Asia, ESPN STAR Sports

Discovery Channel Phillip Luff, president and representative director, Discovery Japan James Gibbons, senior vice president, programming and creative services, Discovery Asia

242 APPENDIX B SUBJECT RECRUITMENT

The meeting with MTV Japan’s officials, Yu Sasamoto, president and CEO, and

Tetsuya Togawa, vice president of research and planning, was set up by Hidehiko Kataoka,

MTV Japan’s former vice president of communications. Hidehiko Kataoka used to be a colleague of the author at Nippon Television Network. The exchange of emails was done

with President Sasamoto preceding the actual interview to refine the questionnaire asked in

the interview. The interviews with Discovery Japan’s president and representative director

Phillip Luff, Sports-i ESPN’s manager of planning Ichiro Hase, Cartoon Network Japan’s

associate director of corporate public relations Michiko Hashida, and Cartoon Network

Japan’s programming director Shinji Suetsugu were all coordinated by Hiromichi Sakai,

president of CSSi Inc., who is acquainted with persons in the Japanese cable industry and

also has a long business association with the author.

In terms of interviews in Taiwan, the meeting with Jammie Chen, ESPN Taiwan’s

senior marketing manager, was coordinated by Leon Liu of Far EasTone

Telecommunication, who used to study with the author at Michigan State University. Leon

Liu also introduced to the author MTV Taiwan’s Chiu Kuang Wu, who set up the meeting

with MTV Taiwan’s creative and content director, Sharon Chang. In order to recruit a

participant from Cartoon Network Taiwan, the author initially contacted Ringo Chan, vice

president for Turner International Asia/Pacific, introduced by Sylvia Chan-Olmsted, chair of

the author’s dissertation committee at University of Florida. Ringo Chan recommended the

author to contact Michele Schofield, director of programming and acquisition at Cartoon

Network Asia Pacific, who oversees the programming strategies in the region. Michele

Schofield set up the interview with Gary Chow, program manager of Cartoon Network

Taiwan. Discovery Japan’s president Philip Luff spoke to Tommy Lin, who manages

Discovery’s Taiwanese office, regarding the interview. However, because his main role is

243 advertising sales, it was deemed that he might not be able to provide much information on

programming strategy, and the interview was not appointed. President Luff gave the author

a suggestion that the best person for the interview would be the head of programming for

Asia Pacific at their regional headquarters in Singapore.

In Singapore, the author intended to have three interviews. The meeting with Mishal

Varma, senior vice president of programming, music, and talent at MTV Networks Asia, was coordinated by Ho Yang Mok of MTV Asia with an introduction from Hidehiko

Kataoka who used to work for MTV Japan, as noted earlier. In order to set up the interview with an official of ESPN STAR Sports, the author first contacted Angela Fung of STAR TV, introduced by Sylvia Chan-Olmsted, and got an introduction to Manu Sawhney, executive vice president of programming and event management at ESPN STAR Sports. Although the interview with him was set up by Annie Law, a personal assistant to him, it was cancelled on the previous day because of his urgent business. As an alternative, Annie Law provided the author with an opportunity to meet with Nick Wilkinson, vice president of programming in Southeast Asia. As indicated above, Discovery Japan’s president Philip Luff recommended the author to meet with James Gibbons, senior vice president of programming and creative services at Discovery Asia. Besides those three interviews in

Singapore, an interview with Michele Schofield, who was mentioned above, was arranged in Hong Kong, as Cartoon Network does not have an office in Singapore.

244 APPENDIX C INTERVIEW QUESTIONNAIRE

--- What percentage of your programming is supplied from the parent network on average? --- In which countries are those programs originally made? --- Why do you offer programs supplied by the network? --- What are the considerations when you choose the network programs? --- How do you localize content for your market? --- Why do you offer program originally made by you? --- How do you describe viewers’ tastes or preferences in your market? --- What influences do you think those tastes or preferences on your programming? --- It is assumed that your programming specializes in one or two program type(s) (e.g., music, sports etc.). To what extent do you think your specialized program type has universally appeal to a worldwide audience? --- Do you think it is possible to develop programs, which appeal to all over the world? --- Please specifically characterize the target audience segment of your channel. --- Given a program shared with other channels of your network, do you think it was made for audiences in a specific market or those in the world? --- Do you think viewers in your market receive the American-made or foreign-made content well? --- Do you think there are some aspects in network programs, which cannot be understood by audiences in your market, because of cultural differences? --- Do you think your market is developed enough to produce content your channel specializes in? --- Please give, if any, some specific examples of regulations on foreign programs and materials (e.g., quota or censorship) in your country? --- Which one— standardized programming or adapted programming—do distribution services generally prefer in your market? Why? --- Which one— standardized programming or adapted programming—do advertisers generally prefer in your market? Why? --- How many competitors does your channel have in your market? --- How do you differentiate your programming from the competitors? --- What is the market position of your channel? --- How is your brand recognized in your country? --- Is the global image important for you? --- Do you think it is difficult to maintain the global image while offering locally adapted content in your market? --- What country is perceived as very strong in your specialized program type in your country? --- What is the vision and philosophy of your network in terms of international business? --- To what extent do you think your parent network is expert in international business? --- How important is it for you to be part of your parent network? --- How important is your market for the network? --- Please specify the ownership pattern (i.e., wholly-owned subsidiary of parent network, joint venture, or licensing agreement) of your channel? --- To what extent do you think your channel is given autonomy in programming from your parent network?

245 APPENDIX D COPY OF INFORMED CONSENT SHEET

Informed Consent Dear Programming Manager:

I am Goro Oba from University of Florida. I am currently working for my doctoral dissertation titled "Programming strategies of U.S.-originated cable networks in Asian markets." Based on the international marketing theory, the study discusses the extent to which globally or regionally standardized programming or locally adapted programming is offered by major U.S. cable networks in the selected markets of Asia and the rationale behind the programming decision. As part of the study, I will conduct in-depth interviews the purpose of which is to learn about what factors are perceived as significant determinants of the decision of programming standardization/adaptation. Interviewees will be asked to participate in an interview lasting about 1-1.5 hour. As I know your time is very precious, I really appreciate your taking the time to help me with this research. Please see attached a list of questions asked in the interview. You will not have to answer any question you do not wish to answer. Your interv iew will be conducted at your office. With your permission, I would like to audiotape the interview. Only I will have access to the tape, which I will personally transcribe. Your identity including name, affiliation, and title will be revealed in the final manuscript. There are no anticipated risks, compensation, or other direct benefits to you as a participant in this interview. If you have any questions about the project, please feel free to email me at [email protected]. Questions or concerns about your rights as a research participant rights may be directed to the UFIRB office, University of Florida, Box 112250, Gainesville, FL 32611; ph (352) 392-0433. Please sign and return this copy of the letter before the interview begins. A second copy is provided for your records. By signing this letter, you give me permission to report your responses in the final manuscript. Thank you in advance for your participation.

Goro Oba College of Journalism and Communications Approved By University of Florida Institutional Review Board 02 Email: [email protected] Protocol # 2006-U-202 For Use Through 3/06/ 2007 (Supervisor) Sylvia M. Chan-Olmsted Professor, College of Journalism and Communications University of Florida Email: [email protected]

I have read the procedure described above for Goro Oba’s dissertation interview assignment. I voluntarily agree to participate in the interview and I have received a copy of this description.

______Signature of participant Date

246 APPENDIX E INTERVIEW WITH MTV JAPAN-1

March 15, 2006

Oba: What percentage of MTV Japan programming is from MTV Networks outside of Japan? Togawa: The programs supplied from overseas that we accept and broadcast are mostly reality programs, such as “The Osbournes” and “Nick and Jessica,” and also some event shows like “The MTV Video Music Awards.” These programs arrive as a package and are aired with Japanese subtitles. This kind of content represents a surprisingly small percentage of our entire content, only about 10-20%. In general, we get these shows from MTV U.S. However, in this World Cup Soccer year, there was a nine-part drama series about soccer players from MTV Europe called “The Goal.” Information about programs made by MTV Networks around the world is delivered to our programming division. They select programs, which they believe will succeed in the Japanese market, and request samples from each MTV. If they are convinced that the program will be received well by Japanese viewers, we then offer it. Most of these programs are from the U.S. or the U.K., and very few programs from MTV Asia reach our programming schedule. We usually offer an annual MTV Asia video music awards program but edit down from a two-hour program to one hour. MTV Networks’ basic rule is “MTV is local.” The amount of the U.S. MTV content supplied for international MTV channels is actually quite small. And, there doesn’t seem to be much exchange of content between the U.S. and the U.K. MTVs. MTV Europe is based in England but has channels in Germany, Italy, France, and other countries. MTV U.K. sometimes distributes content around Europe, as MTV Asia’s Singapore headquarters does for other MTV channels throughout Asia. Oba: Aside from the 15% provided from other countries, is your programming all original MTV Japan content? Togawa: That’s correct. At this stage, we don’t purchase content from local production companies. Aside from airing subtitled programs from foreign MTVs, there’s always the technique of editing foreign MTV’s material and incorporating it into our original content. However, we treat these programs as our own productions. Oba: Why do you offer foreign MTV programs, though they might be a few? Togawa: We have a lot of different people making up our viewers. Some of them watch our channel because they want to see American or European MTV content. In Japan, NHK and commercial broadcast networks can be viewed all over Japan, and until recently many people were not familiar with the idea of paying for television channels. MTV knows viewers are paying to see programs they want to and so doesn’t always go with what will be popular with the masses. We don’t rely simply on advertising for our revenue, and so particular needs of our viewers must be met. One of the results of this consideration is that on MTV, you can see American programs that you cannot usually see on Japanese over-the-air television.

247 Oba: Do you believe there’s something within MTV content that has universal appeal? Togawa: Yes. For example, the same version of the U.S. MTV Music Awards is aired around the world. Also, there are programs, which use the same universal format but with the content customized for the local market. “MTV Jammed” is a program, which features artists turning up in various places and situations, such as school graduation ceremonies, to perform unannounced live shows. This program is aired in the U.S., Europe, and Korea under the same format, featuring different famous local artists for each market. There are many programs, which are appropriated like this. Oba: MTV U.S. certainly produces an enormous amount of programming. What are the standards you employ when choosing content from that for the Japanese market? Togawa: Whether or not it suits Japanese viewers’ tastes. As for music, we think about whether or not an artist is popular locally by looking at sales data from music stores such as Tower Records and HMV. Also, in the case of artists like Britney Spears and Avril Lavigne, many are presented in the Japanese media as fashion leaders rather than musicians. So, they represent more than just music. Knowing just where Japanese youth position these artists is an important part of our programming strategies. Oba: How would you describe Japanese viewers’ tastes in a nutshell? Togawa: Well, as a basic prerequisite, young Japanese viewers expect foreign and Japanese artists to have a certain amount of musical talent. Aside from that, there are considerations like the artists’ fashion sense, how close they feel to the artist, and whether or not the artist is a good dancer. Oba: Now you mention a feeling of affinity with the artist. Don’t Japanese viewers feel some sort of kinship to other Asian artists? Togawa: Japanese consumers have a unique way of thinking about Western brands. Most young Japanese have at least one item of Western-brand fashion label. I think this trend can be said of music as well. I think there’s a strong appreciation of Western artists. To turn that on its head, I think a lot of Asian countries feel just as strong an attraction to Japan, and this is not just Japanese artists but also products, proven by the popularity of anything with the kanji characters (the Chinese characters in the Japanese language) for “Tokyo” written on it. So, I think Asian youth look to Japan, while Japanese youth look to the West. At the moment, there are some Korean artists who are proving popular in Japan, but I think the main reason behind their recognition is the fact they speak Japanese. Most Korean artists active in Japan can speak at least a little Japanese. Oba: Are you saying that Asian artists have more success in Japan if they adapt to Japan more? Togawa: That’s right. Not many acts have succeeded playing on the exoticism of Asia. For example, no Indian or Thai artists have broken through here. Oba: So, you don’t bring in MTV Asia-produced programs. Togawa: We could if we wanted to, but there doesn’t seem to be such a big market for Asian artists in Japan. Japanese viewers don’t have much interest in Asian artists. MTV Asia aims its programs to the Chinese-speaking market and jointly delivers to those countries. MTV Korea is under the control of MTV Asia, but since Korea seems to have a strong and unique culture of its own, it

248 doesn’t seem to offer much MTV Asia content, which is made in Singapore, either. Oba: What sort of influence do Japanese viewers’ tastes have on MTV Japan’s programming decision? Togawa: MTV is a music channel, so we make the viewers’ needs regarding music a priority. Selection of songs is heavily influenced by viewers’ needs. Viewer interest is directed at whatever genre is popular in Japan at a given time. There are trends in what genres are popular. What we offer is the music of the moment and the artists of the moment. Over the past few years, we have not aired much of the rock genre, since the hip-hop genre has been booming, but rock has been coming back since last year. If we are not able to keep our fingers on that pulse, there would be a gap between what people want and what we are airing, and we would lose viewers. Oba: Don’t you put importance on whether it is Western or Japanese music? Togawa: Many people may think MTV is completely devoted to Western music, but 70-80% of the music market in Japan is in fact home-grown music. MTV plays whatever foreign music is popular, for example, hip-hop, while introducing Japanese hip-hop at the same time. We are always conscious of music genre. Some viewers like both Western music and Japanese music, so we have a timeslot in which we air a collection of music videos of both. At the same time, we are mindful of genres. This is actually quite difficult, since there can be both Western versions and Japanese versions of the same genre, but there are some “Western music only” and “Japanese music only” fans. So, just because music is grouped in a certain genre doesn’t mean it will be popular irrespective of whether it’s foreign or local. Oba: I can see now that quite a lot of people want locally made content. But, which are there more of, people who want to see only Western music or people who want a mix of Japanese and Western music? Togawa: There are people who want all foreign content, but as a market share, they are negligible. But, what we do know from finding names like Britney Spears and Avril Lavigne on questionnaires about favorite artists is that there are probably a number of viewers who have at least a partial interest in Western or foreign artists. I think there are quite a lot of people who like a bit of Western music as well as Japanese music. As the company MTV Japan, what is important is how we can get the largest share of the market. So, there’s a need to schedule offerings according to viewers needs so that those viewers who want to see local programming can watch programs showing all Japanese content, and those who want only Western music can watch those types of programs. Oba: What is MTV Japan’s main target audience? Togawa: Men and women in the 15-to-34 age demographic. Within that, we have our core audience of those in their late teens to early-twenties, which is the demographic we usually aim programming at. Basically, it’s the same as foreign MTV channels. However, people signing a contract to access our channel are often not the audience themselves but people such as their parents. So, as a business strategy, we have to provide at least a little content aimed at the people who hold the purse strings. We air a program featuring 1980s music videos but not in a prime timeslot. Additionally, something we learned from a viewer survey three years ago is that a large proportion of our

249 MTV Japan viewers are either what we call “innovators” or “early adopters.” These people receive new information quicker than others and pass on information to their friends. As a corporation, we use an efficient sales promotion system whereby we distribute information to people who pick up on things quickly. Compared to other channels, we have a lot of customers, such as those who have a lot of foreign friends, those who are thinking about studying abroad, or those with just an interest in English. It’s mostly young people who have a strong interest in foreign countries. 30% of the music we broadcast is Western, so no one who really hates foreign music is watching our channel. For that kind of people, there are all-Japanese music channels, which probably provide enough for them. I think, after all, MTV is thought of as a channel for those who like Western music. People have differing perceptions: some are amazed that most of our content is local music, and some are surprised that as much as 30% of it is foreign. People who watched MTV in the 1980s would be surprised that we are playing so much Japanese music, while junior high school students and high school students these days don’t really have a strong image of MTV with foreign music and would be surprised to know that foreign music makes up 30% of our content. Oba: Was the shift from foreign-based content to primarily Japanese content a conscious decision on the channels’ part? Togawa: Meeting the needs of viewers is considered B2C. Aside from that, there’s also the fact in the B2B aspect that we cannot reach our viewers without putting a channel on a cable operators. Music channels are easier to handle if they are grouped into “Western music” or “Japanese music” genres. I think this is because it’s easier to collate a line-up that way. In that sense, it’s easier for MTV to be taken on by a number of different cable operators if MTV mainly airs Western music. On the other hand, since only about 20 or 30% of the music market in Japan is comprised of Western content, if we specialize in that, not everyone will tune in us. This is the dilemma MTV faces. MTV Japan’s Japanese-to-Western music ratio is something like 7 to 3, but there are some who may find this status too negative. When we say things like, “We cater to viewers’ needs by prioritizing local music,” we put ourselves in such a position. But again, if we were to air nothing but foreign content, we would lose our viewers. When we first began programming service in 2001, we had 2.5 million subscribing households. I think we were under the impression that if those numbers did not change, we could start offering all foreign content and secure a large viewer base of hardcore fans. The assumption was that the number of subscribers would not increase, nor would it decrease. Now that we have about six million subscribers and are gaining a projected extra 500,000 a year, I think choosing to show all foreign music once we reach 10 million subscribers would see us losing the 70% of our viewers who want Japanese music. Adding fans of local music to our viewers without betraying our core Western music fans is our main focus. Oba: Do you also get requests from record companies to air a certain artist’s video? Togawa: All music channels including MTV receive music videos from record companies. MTV pays a fee for airing them, but from the point of view of the record company, there are some products you would pay to have aired. Music videos were originally promotional tools, but nowadays with the

250 advent of DVD and other technology, they have become products in their own right. So, for the record company, music videos are both promotional tool and product. They know that MTV Japan does business by airing such videos, so they want us to pay for that privilege. Oba: Do local record companies also supply Western music videos? For example, can you broadcast the work of an American artist without going through MTV U.S.? Togawa: That depends on the record company. Some of them have what are called “global contracts.” But, even with global contracts, we have to get our material from the local distributor of the foreign record label, such as Universal Japan. In other words, even if there’s a global contract arrangement between MTV and Universal, the exchange of the music video is conducted between MTV Japan and Universal Japan.

251 APPENDIX F INTERVIEW WITH MTV JAPAN-2

March 15, 2006

Oba: Does MTV Networks International intervene with MTV Japan’s programming strategies? Sasamoto: No, they have no say in what we choose to offer. Oba: So, would it be possible for you to offer all MTV Japan original material? Sasamoto: It’s possible. To give an extreme example, if we were to air only content supplied by MTV Networks, our costs would be less than halved. In reality, we choose programming that is suited to Japanese audiences from a vast library, which makes up only 20% of our programming schedule. We pay a fee to use this library, so not accepting any content from it would be a waste. Oba: What are the factors that limit your use of foreign programming to 10-20%? Sasamoto: The needs of the viewers we are targeting. In terms of music, the demand for Japanese music is huge. Aside from music, Japanese comedy is enjoying a boom right now, but if we were to import American comedy, it would not become popular. What we want is material that our target viewers can integrate into their lifestyle. The current foreign/domestic content ratio is a natural result of this. If we were able to increase the number of viewers by providing dubbed or subtitled American MTV content, then we might raise the ratio to 30 or 40%. Oba: So, does that mean, assuming the criterion for selection of programming from overseas MTV channels is whether or not it would be popular with Japanese audiences, if MTV U.S. was to produce a number of such programs, the ratio might increase? Sasamoto: That’s correct. At present, the programs we select based on potential popularity eventually amount to the 10 or 20% of our total content. Oba: What is the situation regarding the broadcast rights for programs created by the U.S.? Sasamoto: In most cases, broadcast rights are retained even for markets outside of the U.S. For music, these are entirely covered. Paradoxically, if this was not the case, then I don’t see why artists would perform on MTV. As far as the record companies and artists are concerned, MTV is a promotion medium for their releases. So, naturally there’s a considerable desire on their part for their material to be shown in as many places as possible. I don’t know whether it’s the power of media, the power of funding, or a combination of the two, but the retaining of broadcast rights by MTV U.S. for material to be shown overseas is a huge plus. Oba: And even so, only 10 to 20% of MTV’s programming is from overseas sources? Sasamoto: The balance of cost and income has an influence on profit. Even if our costs are low, it doesn’t make business sense that we cannot attract the viewers, and our advertising potential is limited. Our current programming ratio is about right. Oba: So, basically do you think American programs will get neither advertisers nor the viewers?

252 Sasamoto: That’s right. The share of the market that wants to see American or foreign programs is probably about 10% of the total market. It’s not enough to satisfy the target reach set by advertisers. Oba: Are you saying that even if you target the niche market of foreign music fans, you will not make a profit? Sasamoto: It depends on the volume of that market. We have around 9 million multichannel subscribing households in Japan. It’s not more than 10 million. Now, it would be untrue to say that the majority of these households belong to the wealthier classes. There’s a limit to the advertising aimed at viewers interested in foreign or American programming. On the other hand, there are probably some viewers who would not mind paying even premium subscription rates in order to see foreign programming. However, the cable operators and Sky PerfecTV are selling MTV Japan as a part of a larger package of channels, so even if MTV Japan were a premium channel, it never leads directly to revenue. Oba: Where does most of MTV Japan’s revenue come from? Sasamoto: We obtain our revenue through viewer subscription fees from multichannel platform firms, advertising fees, and also a little from merchandising and license fees. Most of it comes from subscription and advertising. Subscription fees are made up of the carriage fees we receive from the cable operators and Sky PerfecTV and also the revenue generated from official websites accessed on mobile phones. It works out that about half of our revenue comes from subscription fees and half from advertising. Oba: Do these multichannel platforms make any specific requests regarding programming? Sasamoto: Of course, they have their own ideas about development, and they request international content be aired on MTV Japan. In their view, MTV is analogous with Western or foreign content. However, the people paying for this programming are the contracted viewers, and so the viewers’ requests should be heard. If many viewers are not interested in programs from the West or the U.S., these will not be aired no matter how much the platforms push for Western or foreign content. In the end, it’s the viewers that decide, and so programming that reflects their needs is paramount. Oba: Is there any sort of capital participation by Viacom and MTV Networks in Japanese multichannel platform firms? Sasamoto: None whatsoever. Neither Viacom nor MTV doesn’t fund any platform firms. Oba: What kind of companies advertise through your channel? Sasamoto: We have a wide variety of advertisers, from Honda through to McDonalds, and are not really biased toward any one industry. What they all have in common is that they are all branding their products to the core MTV Japan target audience, the 15-to-34-year-old demographic. In recent years, you can see a trend in centralization of branding and product promotion as an advertising skill. But, if we look at the situation through AIDMA’s rule, MTV Japan can manage “attention” and “interest” but not necessarily “action.” Advertisers use our channel when they want to provoke consumer attention and interest in their product. Oba: Isn’t it true that there are a lot of foreign-affiliated firms among your advertisers?

253 Sasamoto: At first, this was the case. In our first year, almost all our advertisers were foreign-owned firms. But, MTV Japan has come to the point where it’s now recognized by Japanese firms as a medium for sales and a true media brand. To begin with, we were not able to get Japanese firms to understand our product, and so we were not able to fit the product into their advertising strategies. Also, the multichannel market is quite small in this country. Domestic firms first consider over-the-air television advertising, and over the last five years, the Internet has taken up a significant position in advertising. There’s not much need for advertising of multichannel media. We call it “MTV360,” and the provision of MTV Japan’s cross media products has its background in that. Oba: How is the MTV brand recognized in Japan? Sasamoto: It’s a fact that we are becoming more acknowledged year by year. At the beginning of the 1990s, MTV was aired on terrestrial broadcasting, so the brand name is reasonably well known for those in their thirties and forties. But, it’s not so recognized by those in their teens and twenties. However, we are pretty well known by advertising decision-makers. Oba: What kind of image do you think viewers have of MTV? Sasamoto: It’s ironic, but many people think that all programs showing music videos are MTV. Whether this is because MTV is an established commercial brand or the format itself is well-recognized, we don’t know, since there’s no real market research on this. When we first began the programming service, we did a survey about what kind of image viewers had of the channel. An incredible number of respondents said “playing music videos,” so they thought programmers like “Space Shower” and “Music on TV” were MTV, too. That image is changing. Viewers of music channel can see the difference in image between Space Shower and MTV, that is, the difference between a dyed-in-the-wool Japanese music channel and one that has more of an international flavor. But, MTV is not aiming to be purely a music channel. We want to be the number one in entertainment media, so MTV Japan is in a different league to programmers like Space Shower. Oba: Is the international image important? Sasamoto: Yes, we want to continue having an international flavor. But, we are not aiming to have a pure “international channel.” Such channels don’t fit the Japanese market. Within music sales in this country, 80% of CDs sold are Japanese music. It makes no sense to air only foreign music in such an environment. It’s not what the market wants. However, in terms of differentiation, it is important to add international flavor to our channel for a brand image. Oba: Do you think that Japanese are attracted to the international image? Sasamoto: Not these days. I get the feeling that young people especially don’t think like that so much. They basically see the international side of our channel as a distinction from terrestrial broadcasting. Oba: How many music channels are there currently in Japan? Sasamoto: There are three major channels, including MTV, but about eight all included. Oba: Which are MTV Japan’s main competitors? Sasamoto: Space Shower and Music on TV. Oba: How would you describe MTV Japan’s position in the market?

254 Sasamoto: As regards positioning of the channel, we don’t want to see ourselves as simply in the music channel domain. In this light, every entertainment channel aimed at 15- to 34-year olds is our rival. Fox Japan and AXN would also be our competitors. So, as far as positioning MTV Japan, we want to maintain the image of a music entertainment channel. As far as business is concerned, we don’t want to be seen simply as the MTV you find on cable or satellite broadcasting. As a media brand, MTV also offers content on the Internet and to mobile phones. MTV is an acronym for Music Television, but from the current media structure MTV Japan considers, we don’t want to use the word “television” too much. The entire advertising market in Japan is worth 6 trillion yen, but the market for advertising on satellite broadcasting is at most 20 billion yen. At the same time, the Internet-based advertising market has grown quickly over the past five years to the point where this year it’s worth over 200 billion yen. We feel there’s no point in limiting ourselves to the 20 billion yen market and must think about getting a piece of the 200 billion yen arena. We feel we want to create a media brand that straddles the interactive advertising market and the cable/satellite advertising market. Oba: Where is the value in MTV Japan from MTV Networks’ or Viacom’s perspective? Sasamoto: There are two main benefits for them. One is access to Japan, the world’s second-largest advertising market. They find a huge value in Japan’s advertising market as a source of revenue rather than the Japanese multichannel market. Also, Japanese ability to create content, such as animation, is prized in foreign markets. So, there’s the idea of MTV taking this kind of content to the foreign market. Japan also leads the world in mobile phone technology. We are a model for the rest of the world in terms of how to create mobile-based business. So, Japan is an important country as a source of both quality content and emergent technology. These strengths are utilized not only by MTV but also Nickelodeon. Oba: From the opposite point of view, what does it mean for MTV Japan to be affiliated with MTV Networks or Viacom? Sasamoto: I think being a member of MTV Networks is more important to us than our association with Viacom. We are able to obtain content from worldwide MTV channels, though it makes up but 10 to 20% of our programming. Rights to the music videos are settled comprehensively in the home country, so from a cost point of view, we have an advantage over Space Shower and Music on TV. With regards bargaining power, we have the significant backing of MTV Networks. For example, if a Japanese artist wants to do promotion elsewhere in Asia, they are unable to promote on any music channel but ours. MTV currently airs a program called “Buzz Asia,” which introduces artists from Japan, Korea, and Taiwan to each other’s viewers. Since music is essentially an intangible product, there are some aspects of it that cannot be explained theoretically. For example, we have secured the services of quite a number of artists for reasons, such as that they don’t want to appear on Space Shower but want to appear on MTV. There are some parts of the business that remain immune to business dealings no matter how much money you throw at them. We get a lot of requests from famous artists to appear on our large-scale annual music awards show, “MTV Video Music

255 Awards Japan.” That’s because it’s MTV. For the artists, we have a lot of brand power. We have this brand power, because we have know-how, which comes from putting effort into producing images.

256 APPENDIX G INTERVIEW WITH MTV TAIWAN

July 26, 2006

Chang: Our brand, MTV Taiwan, is a music-based entertainment channel. Now we have twelve locally produced shows in total. Those twelve shows are music talk shows, fashion shows, and entertainment news. So, we are full of music-based shows, because we are music entertainment channel about a young people lifestyle. Oba: I wonder if your channel cannot be seen in other areas like Hong Kong or Mainland China. Chang: Hong Kong is covered by MTV China now. Oba: Does MTV China cover Mainland China and Hong Kong? Chang: Yes. Oba: What territories does MTV Taiwan cover? Chang: We are only for the Taiwanese market, but some of Singaporean, Malaysian, and Hongkongnese have satellite capabilities. They can receive our programs. Besides, MTV China has three MTV Taiwan’s shows. Oba: What percentage of your programming is from MTV outside of Taiwan? Chang: 90% is locally produced. For your reference, this is our programming grid. Many of the shows are “Non-Stop Hits” playing music videos. We focus on 6 pm to 11 pm as our key timeslot. At 11 pm, there is an international show. We show the VH1 show. Of course, we have U.S. MTV shows, like “The Osbournes” or “Pimp My Ride.” They are produced in the U.S. They are 10% and just put on this belt. Oba: You have some Non-Stop Hits hours in the morning. These time periods have some Western music videos, right? Chang: Yes, Mandarin and international music videos. It’s mix. But, we focus on Japanese and Korea music videos between 7 and 8 am. Oba: How do you choose some Japanese music videos? Is it according to the request from viewers? Chang: The relationship between MTV Taiwan and MTV Japan is closer, compared to MTV Taiwan and MTV U.S. MTV Japan gives us recommendation, and we also have contracts with some major record companies. Oba: So, do you receive a kind of playing list from MTV Japan? Chang: Yes. Oba: How do you localize foreign-made programming like imports from the U.S. so as to cater to Taiwanese viewers’ tastes or preferences more suitably? Chang: Actually, Taiwan’s viewers don’t like American programs much. They, especially teenagers, don’t like Western programs much. So, we basically use the prime time to offer local-made TV programs and put some Western programs after 11 pm, because viewers at that time can understand American programs better than viewers at earlier time. Our programming strategy is based on ratings. Basically, we only put American programs after 11, and programs are basically consisting of big events from MTV U.S., like VMA (Video Music Awards) and some concerts held by MTV U.S. Additionally, programming like the Osbournes is offered. I know Pimp My Ride and “TRL (Total Request Line)” are very famous and high rated shows in the U.S. But,

257 when we aired them, ratings were not good. Sometimes, local audiences may not like the American style. Oba: Do you also import programs made by other MTVs than the U.S. like MTV Japan or MTV Korea? Chang: We have added MTV Japan’s school attack show. It’s a half-hour show. Artists go to school and give the audience surprise. This concept originally came from MTV Korea. Korea developed this show, and all of MTV countries liked this concept. So, MTV Japan copied this show. It had Mika Nakashima and Chemistry as guests. We aired the program, because these artists are famous in Taiwan. We offer VMAJ (Video Music Awards Japan). Of course, we also have some Singapore-produced shows, because these shows always have sponsorship. For Asian markets except for Japan, MTV Asia in Singapore has some sponsorship for advertisers like Coca Cola or some other big brands. MTV Asia gets local MTV branches like MTV Taiwan to adopt some sponsored programs into the programming list. Only MTV Japan directly reports to MTV Networks. Oba: MTV Japan is somewhat independent from MTV Asia. Why? Chang: Because Japan is a big market. Greater China includes China, Taiwan, and Hong Kong. MTV Networks is planning to make Greater China an independent market like Japan. Because MTV Taiwan has strong production capability, creative persons, and label relationship, and record companies are very strong in Taiwan, MTV may offer the programming produced in Taiwan fir the whole Greater China. That’s what MTV Networks is planning to do in the future, but not now. I know they focus on China, because China is a big market. Currently, MTV Taiwan is under the supervision of MTV Asia in Singapore, but MTV Taiwan and MTV China may be independent from MTV Asia. Maybe, in the future, we will offer very similar programs in the Greater China area including Taiwan, Hong Kong, and China. Oba: Even now, you are sharing some programming with MTV China. Why? Chang: This is a basic concept of the network. We share all the resources like locally produced programs. If producers in the Chinese market want to put some Taiwanese programs onto their channel, they just ask MTV Asia to help, and MTV Taiwan would provide them the programs for free. It’s like resource sharing. And, it’s good for artists, because China is a big market. So, they can sell their records to Chinese people. That’s a good thing. Oba: I don’t know why you currently have separate programming services as MTV Taiwan and MTV China. Chang: Basically, we have different languages and characters. We speak a little bit differently. Mandarin is very common to everyone in China and maybe in Taiwan, but people have a different language, Cantonese, in Hong Kong. So, it’s not possible to use only one program for the whole Greater China area. And, some government policies are different. For example, Taiwan’s national flag cannot be shown in the program in China. Our fashion shows always introduce Japanese products, but the Chinese government doesn’t like them. Because Japanese songs are not famous in China, MTV China doesn’t like to play Japanese songs. Oba: How do you describe Taiwanese viewers’ preferences or tastes in terms of music programming?

258 Chang: Local pop music is the first. On our music play-list, 70% is local music, Taiwan’s Mandarin music videos, and 20% is Japanese and Korea music. 10% is international. Oba: Do you mean Western music by international? Chang: Yes. We still have a brand image and an attitude to introduce Western music to Taiwan’s viewers. For example, even if Black Eyed Peas or 50 Cent cannot sell a lot of records in Taiwan and are not so popular to older Taiwan viewers, we still want to import that kind of music into Taiwan, because that’s MTV attitude and brand image. We want to introduce the cutting-edge music no matter where it’s from the U.K. or the U.S. We want best artists to come over Taiwan. We want to introduce that kind of music. Oba: So, you have no choice but to accept the offer from MTV’s worldwide promotion, even if you feel it’s not good for Taiwanese viewers. Chang: It’s not something like that. It’s MTV’s responsibility to introduce it. This year MTV marked its 25th anniversary, and Robin Williams and Madonna are originally from MTV. It’s not because of sponsorship but just MTV’s spirit that MTV in each country has. We want to support some music and artists we think good. Oba: What is the definition of good music and artists? Chang: Basically, music is coming from the U.K. or the U.S. They recommend some good music or good artists. We try to think as Taiwanese people how good the music is. You can’t ignore the market’s taste. We make our decisions on what the imported music is like. And, we also need record companies’ supports. We have “an artist of the month” to promote a certain kind of artists or music intensively. We promote it if it deserves our support. So, we still use Taiwanese tastes for music to make the decision. But, MTV still wants to import some fresh and new things into Taiwan. Oba: Can you specify again what Taiwanese viewers’ tastes are? Chang: From director’s point of view, I need to check ratings everyday. I still have got pressure from the ratings. The taste of Taiwanese is basically pop music. Maybe, the rating will be high whenever we play pop music. The rating will be quite low if we play something like heavy metal or rock music. We can only offer rock music during the midnight, because few audiences like it. I feel a pressure to make ratings better. Oba: Do you have any freedom to reject the offer from MTV Networks when they try to push or promote music, which couldn’t be popular among Taiwanese viewers? Chang: Basically, local MTVs have a full right to reject any requests from MTV Networks. Usually, the case is that MTV Networks will tell MTV Asia what kind of artists, programs, or music they are promoting. I’ll take an artist for example. If MTV Networks wants to promote an artist, they will tell MTV Asia, and MTV Asia tells MTV Taiwan. The artist has a record label company. So, MTV Taiwan will go to the local branch of the label company and ask if they are willing to put some resources into promoting that specific artist. If that works out, we will do something. If the label knows that artist is not good in Taiwan, MTV Taiwan maybe rejects this project. If we think it would be successful, we support it very much. Oba: You get materials or music videos from record companies in Taiwan, don’t you?

259 Chang: Yes. Oba: Do you think some MTV programming has universal appeal accepted everywhere in the world? Chang: I think it’s very difficult for some music to have universal appeal, because of the difference of language and culture. Oba: What about MTV Video Music Awards? It’s been offered all over the world. Chang: The rating is basically based on the appearance of big artists. Actually, big artists are the core of the program. For example, VMA South America won’t be working in Taiwan, but the U.S. VMA with artists every Taiwanese knows is popular. We have a new channel called “MTV Chi.” It’s offered in some areas with a lot of Chinese immigrants in the U.S., like New York or Los Angeles. The shows are actually from China, Taiwan, and some from Korea. Oba: What is the relationship between the new channel and whether or not a certain programming has universal appeal? Chang: Some Western big artists will have universal appeal, but to the opposite, if you want to promote Asian music to the international market, it’s not so easy. One or two artists have done that. For example, there are Japanese artists like Ken Hirai. He’s been to MTV U.S. for the unplugged show. There is another Taiwanese artist who once been to the U.S. ten years ago. So, it’s quite difficult to promote local artists to the major American market. It’s easier for MTV U.S. to present some big-name artists to all over the world. Oba: What’s the main reason for U.S. musicians to be promoted easily in the world, but the opposite is not the case? Chang: I think that’s something we should do to promote local artists and local music to MTV channels all over the world. It’s comparatively difficult, because each market is already competitive. Every channel is working hard in the market, and only if artists or music is so popular, we are willing to use extra resources for promotion, like MTV U.S. to do something for the artist. Or else, we usually don’t do that. There is no motive to promote local artists to the worldwide network. There is no reward. For example, we put our shows to the Greater China area, but it’s for free. We are just sharing resources. Unless the label company is willing to pay big bucks for developing artists for worldwide, we have no motives to do such thing. Oba: Why don’t you have any motivation to promote some local artists on a worldwide basis. I think the bigger the market, the bigger the profit. Chang: The language and cultural part is not so easy to be overcome. For example, an artist, who is very popular in Taiwan, would go to the U.S. and be interviewed. If his English is not so good, it’s very difficult for him to explain himself or perform well. There is a kind of afraid that this won’t be working out, because he is not presenting himself well on the stage. I think basically Chinese songs, music, and language are very difficult for Western viewers to accept, unless it is already so popular. It’s just cultural difference basically. The current situation is that viewers in the States accept more Japanese music than Mandarin or Chinese music. Oba: So, is it impossible for you to promote Taiwanese programming or artists worldwide with MTV’s global network? Chang: Because MTV Taiwan’s programming is offered in most countries of MTV Asia’s network, like Hong Kong, Malaysia, and Singapore, they all import MTV Taiwan’s show on their channels. When a label company wants to

260 promote an artist, they will come to MTV Taiwan not only because of MTV’s high rating in Taiwan but also because of our power for the whole Asian market. MTV Taiwan can send some programs and artists, put the artists on the show, and promote them in the whole Asia. But, it depends on the artist. In the case of Jay Chow, MTV Japan and MTV Korea would be willing to feature him in their programming. But, they may not be so interested in other artists. And, this is not the case in the U.S. or the U.K. but only in Asia. Oba: Do you think music programming in general can cross national borders easily compared to other types of TV programming like animation or sports programming? Chang: Yes, I think it’s an easier format to cross national boundaries compared to news, cartoons, or some other kind of programs. But, I also think music programming is basically something for relaxing. We send you music when you have free time. We are not doing really serious programming. So, it’s basically not the mainstream programming or channel among a lot of channels. So, the market is still limited. Oba: Do you think the preference or taste for music programming is not so much bound by culture? Chang: Different cultures still have some impact on the programming. Foreign artists show their appearances or costumes differently on the TV programming. For example, in Taiwan, in Japan, and maybe in Mainland China, artist’s dressing on the TV show is different to some extent. Because of cultural difference, their fashion will be a little bit different. If you see someone dressing not like you or not like your local fashion, you think it’s strange, and the rating won’t be good. It is a little bit different from radio, because you’ve got to see the pictures on TV. So, culture still has strong impact. Oba: You have some programming offered in Greater China. When you develop such kind of programming, do you initially try to target the whole Greater China, or do you first develop the programming for the Taiwanese market only and then put it to other countries? Chang: I focus only on the Taiwanese market. If China thinks it’s a good show, they will pick it. Oba: So, you don’t need to take into consideration what kind of programming is preferred in the Chinese market, in the Singaporean market, or in the Hong Kong market. Chang: No. We focus only on Taiwan. Maybe in the future, we have to focus on Greater China. Oba: MTV is a global network. At present, do you think you rely heavily on MTV’s global network for the acquisition of your programming? Chang: We rely heavily on the international network of MTV but not for programming. It’s other resources like brand-new music videos from the U.S. Maybe, when local label companies haven’t got the music videos, we may already have got the videos from our global network. If we want to invite some artists to Taiwan, we will rely on the international network of MTV. There is a special feature of MTV to work with global partners and affiliates. Every month, affiliates like Taiwan or Hong Kong send tapes to Singapore, and they will coordinate to see what parts are best. Then, they will have all things into one tape or one CD and give the tape or CD to all local channels.

261 That’s where our creativity comes from. Other than programming, MTV Asia published this book for Asian MTV channels to tell MTV workers what MTV is. Oba: Do you have any regulations in terms of the amount of imported programming? Chang: There are some regulations, but we usually send a proposal to the News Bureau in Taiwan, which is responsible for that kind of matters. They see on our proposal what kind of programming we will have. They need local content over 50%. Oba: The quota for domestic content in Taiwan is 50%. Chang: At least 50%. Oba: Do you mean music videos or programming? Chang: It’s not about music videos but programming. Oba: So, at least 50% of your programming should be made in Taiwan. Chang: Yes. Oba: What about regulations for content? Chang: There is a kind of regulation. MTV has its own network regulation. Things like religion, pornography, violence, and homosexual things cannot be shown on MTV Networks. That’s MTV’s regulation. Oba: I guess younger people are sometimes more attracted to music videos, which look exciting, including violence or pornography. Chang: We are adding something like mosaic when we do the post-production. Basically, the principle of Taiwan’s news bureau is “You broadcast first, and I review later.” So, if some viewers are not comfortable with what they see, they will protest and tell the news bureau. The news bureau will review the program and impose a fine or some punishments on the TV network. But, because MTV itself has very strict self-regulations, it’s not a big problem for MTV Taiwan. Oba: In general, what kind of advertisers do you attract? Chang: Our major viewers are teenagers, so cell phone or drink manufacturers come to MTV for advertising. Oba: Are they more multinational or domestic companies? Chang: International clients will tell MTV Asia in Singapore. They will cooperate with MTV Asia and will not cooperate directly with MTV Taiwan. That’s the pain for me. Our sales team cannot approach Coca Cola in Taiwan, because the regional office will intervene. They are approaching big artists, brands, or projects internationally. Oba: Do local advertisers have specific requests for your programming? Chang: The advertisers want to use the strength of MTV, our creativity. Usually, they will cooperate with MTV, and MTV makes some commercial films for them. For example, there is an event like a street dance contest. Maybe, we make some commercial films on our own channel. It looks like a MTV program but actually a commercial film. There is some kind of cooperation between advertisers and us. Oba: What about their demands or requests for the choice of music? Chang: Usually, we don’t have requests from advertisers in terms of programming. They come to MTV because of their focus. Our target audience is 15 to 24 and very focused. There is no reason to change our programming strategies. We are the only one channel whose target audience is 15 to 24.

262 Oba: MTV is a very strong brand in the U.S. What is the situation in Taiwan? Chang: In the user session for teenagers or some younger people between 15 to 24, their brand recognition is over 90% or almost 100%. Everyone knows of this brand. But, this is not their only choice of music channel in Taiwan. There are a lot of entertainment channels attracting these teenagers’ or younger people’s attention. Oba: What brand images do they have toward MTV in this market? Chang: “Cool.” It is still very international brand image. Even if over 60 % of our programming is local content, they still think, “This is an international channel.” But, it has something good and bad. Oba: Do you think the global image or the international image of MTV is very important for your channel? Chang: Yes, I think. Oba: Do you think you have to offer more foreign programs or foreign music videos in order to maintain those images? Chang: In terms of image, we will hope to strengthen the image that MTV is international and have a lot of new things from foreign countries. But, when people really watch this channel, the rating is the most important for MTV. We need local content to keep the viewers watching us. That’s a dilemma. If you do something you want everyone to know, you will invite some foreign artists. But, in terms of content, they are still local content. Oba: Isn’t it difficult to maintain the global image with local content? Chang: Local content is locally produced content, but it can be international. For example, you can have a show that tells Taiwanese people what hip-hop is or international music trend. This kind of programming is local content. It doesn’t just use foreign programming in its own. Add some production on it, and then you can do these two things, international at the same time you are local. We are not going to present very Taiwanese songs. Do you know the difference between Taiwanese and Mandarin songs? The market for Taiwanese music is not small but very local. It is very local music. MTV is not going to play that kind of music on our channel. Other channels have aired it. Oba: Do you think the Taiwanese music could not be accepted in other Asian markets? Chang: There are some markets overseas, but it’s not as large as Mandarin music. And, as an international network, we won’t choose that kind of songs and music. It’s very limited, and it’s very local, even in Taiwan. Oba: What are your main competitors in this market? Chang: Channel [V]. But, now Channel [V] is an entertainment channel, not a pure music channel. Channel [V] is trying to transform from a pure music channel to an entertainment channel. They have a lot of entertainment shows. So, we can say now MTV is the only music channel in Taiwan. Oba: How do you differentiate yourself from other competitors in terms of programming? Chang: There was only one competitor in Taiwan. It was Channel [V]. But, Channel [V] is trying to transform itself and become other things. So, there is no obvious competitor in this market now. But, there are maybe so many competitors in Taiwan, because all the channels have a little bit music programming on their program lists. Some cable channels that are not pure

263 music channels have some music programs, for example, from 6 to 7. So, you can say we have no pure competitors. You can also say we have a plenty of competitors. And, Taiwanese viewers are not very loyal. They probably are not patient to watch the whole music video. They will switch channels. Oba: So, do you think if this market is very competitive or not? Chang: Very competitive. MTV is going to insist on original fans as the only pure music channel. We insist on MTV’s image or spirit. In the future, if advertisers are looking for teenagers and music channels, they will come to MTV but are not going to Channel [V], because the market becomes bigger for Channel [V]. But, at the same time, it’s not so pure for music viewers. Oba: MTV U.S. is no longer just a music channel. They have very limited time for music videos. Are you going to follow the same way? Chang: In the U.S., MTV has many different channels like MTV, MTV2, VH1, and Nickelodeon. They can try to differentiate each channel. For example, MTV focuses on music and fashion. MTV2 is for youth and music. VH1 focuses on audiences over 30 years old. Nickelodeon does cartoons for kids. They can do very specific things on each channel. But, since we have only one MTV channel in Taiwan, we still focus on music and our main audience. Oba: From MTV Networks perspective, how important is this Taiwanese market or MTV Taiwan? Chang: The Taiwanese market is small, so it’s not very important. But, Taiwan is important in terms of Chinese content production, because MTV is looking for the future Chinese market. The Greater China market is very big. The Taiwanese market is important, because we have the same language. We have a very strong capability in production in Taiwan. That makes MTV Taiwan more important, but if you only consider the market, it’s not so big. Basically, the Chinese government does not allow any international TV networks to have channels in China. The programming service that now can be shown in China is a programming block, using MTV’s icon on the screen just for two hours. They have a 24-hours service only in Guangdong. Even if China is a big market, it has a lot of difficult restrictions and regulations. Oba: MTV Taiwan is the main producer of content in Mandarin Chinese. Chang: Yes. Oba: This is the opposite question. How important is it for you to be part of a global television network? Chang: MTV’s resources are very important for MTV Taiwan. Oba: What resources do you mean? Chang: Most important and valuable things in this network are branding and creativity. In terms of creativity, you get it from all over the world. We share creativity with each other within this network. For branding, of course, MTV is doing well. The international brand is very important. But, in terms of budget or some human power, we don’t get them much. They don’t support a lot on capitals. Oba: In spite of a member of a global network, you offer just a few percent of programming from outside Taiwan. Why? Chang: In the end, the ratings are still very important. We tried many times to import programs from foreign countries. They’ve not been so successful in terms of ratings. We need localization to adjust programming for Taiwanese tastes. So, 10% of foreign stuff will be good for Taiwan viewers.

264 Oba: MTV now has a presence in Asia at least for 10years. From your perspective, is MTV Networks very expertise in international business? Chang: In terms of business in Asia, the market is pretty much full of music channels like MTV. So, we have a strategy to promote other channels. MTV is promoting VH1 and also Nickelodeon into this Asian market. There is some cooperation going on. Oba: So, do you think MTV is very expertise in international business? Chang: Frankly speaking, they are not doing very well in the international market, especially in Asia. They are doing quite well in Australia. But in Asia, they are not doing well. Oba: Do you think Asia is a tough market for U.S. firms to get into and become successful? Chang: I think a company based in the U.S. has difficulty doing business or doing TV programming in Asia. Leaders of the company maybe do not make good decisions. It’s not very successful now. But, it’s not because the company is based in the U.S. or foreign countries. Oba: What type of difficulties do they face in Asian markets? Chang: I think the biggest issue is localization. You cannot just use some foreign programs to put into a market and ask the viewer to accept that kind of foreign content. You need to use your international resources, but you still utilize these resources to make local content. That’s the biggest challenge. So, viewers will accept this is international, but it’s also preferable content for them. Maybe, local people need to introduce this kind of international content. We need to respect the decision from local programmers or producers. Because the economic was not doing very well in previous five years, the MTV group becomes more conservative in terms of investment on local franchise. Comparatively, STAR TV keeps investing lots of money, so they can make big shows and do a lot of cooperation and events. We don’t have that kind of supports from the parent company. Oba: Do you think the localization needs more money? Chang: Spending money and localization are not necessarily equal. But, you need to have decent budgets to make decent programs. Maybe, we don’t have enough budgets compared to competitors. Oba: I think it costs less if MTV Taiwan puts content made by MTV Networks and just offers it in this market. If it’s true, why don’t you take that? Chang: Even if you can save money, you have to sacrifice the ratings. Oba: That’s why I asked if localization might cost a lot. Chang: Making programs by ourselves costs more money than just bring videotapes to offer. Oba: How much freedom do you have in terms of programming decision, free from MTV Asia or MTV Networks worldwide? Chang: Totally free. Oba: So, your decisions are always prioritized, even if MTV Asia or MTV Networks reject them. Chang: But, we need to reserve some time programming blocks for MTV Asia’s sponsorship. Oba: Are you owned by MTV Networks Asia? What’s the ownership pattern? Chang: There are no other investors. MTV Networks owns MTV Asia, and MTV Asia owns MTV Taiwan.

265 Oba: So, in a broad sense, MTV Networks is your parent company. Don’t you need to follow what they ordered? Chang: The parent company is sharing resources like they recommend you, “This show is really good and popular in the U.S.,” or “There is something very popular in India. Do you want to see or do you want to use this in your programming?” They are doing recommendation but not intervening. But, we have some copyright issues. For example, MTV U.S. offers you some programs. But, copyrights for the programs might be owned by some production houses. MTV only has one- or two-year rights on these programs. So, we have some pressures to make decisions within the two years. Oba: At the end of the day, what do you think the most significant factor when choosing content in this market? Chang: The judgment is whether this content would be preferred by our target audience between 15 and 24 years of age.

266 APPENDIX H INTERVIEW WITH MTV ASIA

August 28, 2006

Oba: MTV Networks has many country specific programming feeds in Asian markets like MTV Japan or MTV Taiwan. What MTV programming feed is dedicated to the Singapore market? Varma: There are 10 different MTV feeds in the region. You have MTV Japan, MTV Korea, MTV China, MTV Taiwan, MTV Philippines, MTV Indonesia, MTV Thailand, MTV Australia and New Zealand, and MTV India. And then, you have a feed, which we internally call SAM, Singapore and Malaysia. There is one channel that goes to both Singapore and Malaysia markets. So, it’s not part of Southeast Asia, because each market in Southeast Asia has a different channel. Our strategy and success in the region has been localization. There are many aspects of localization. One is reflecting the tastes, the likes, and the trends of that particular youth in that particular market, and the obvious differences are language and music tastes. Each one of our local markets has a very unique music style basically that comes from their own language. Oba: I’m actually not sure what localization really means. Does it mean you prioritize local music, or you prioritize demands among local viewers? Sometimes local viewers may prefer international stars rather than local stars. Varma: I would like to call MTV as glocal, because that’s global and local. On two levels, one is global, because it’s a global brand, and then another is the local part of it, because it’s talking to local audience. I think the key from our programming strategy point of view is to be very mindful of the people that we are just talking to. That’s why we have separate channels in each market. You are completely right in that there are many audiences around the region who look at MTV for international programming, whether it’s music or long talk shows. And then, many markets look at MTV today as want for all the local programming. So, the success lies in finding the right balance between the international and the local programming mix. It is very different in different markets. For example, in India, we play 95% of the music and the programs are all Indian, whereas in the Philippines, it’s only 60%. But, in the Philippines, there is a lot more wants for international programming, especially the U.S. programming. It’s not necessarily the case in India as much. India has its own thriving film industry and therefore music industry. So, obviously our channel is very reflective of that. However, having said that, India is also a very big market, and so we have two brands there. We have MTV and VH1. VH1 is not like VH1 that you might know from America. It’s very different. VH1 is the international channel that complements MTV. You and I might travel the world and see MTV all over the world. I have a lot of people who come into Asia and say, “This is not MTV. This is something else.” But, for the audience, which is what’s most important to us, it is MTV. It is something that they have seen and developed in their own market. So, it is really important for each of us never to loose sight of the fact that we are programming this channel based on what the audience wants, knows, and needs, not on what we perceive it or anybody

267 else perceives it to be. I think when somebody comes to me and says, “Oh my god! Look at the music you are playing on MTV. This is an MTV.” That to me in a funny way is success if it’s coming from a foreigner. They don’t understand it at all, but probably the local audience understands it, and that’s very important. So, it’s a very difficult game to play, and it’s very difficult balance to strike. But, it is something that we’ve done very successfully in the markets and why we have the reputation of being the number one youth music channel in the region. It’s because we have embraced local music like nobody else has. I remember India eight years, nine years ago, or ten years ago when I started. We were playing a lot of international music. We were getting maybe five music videos a month from local artists, because nobody would play their videos. And then, they started play their videos. Now we get 25 local videos a week, because now people realize that there is an outlet for their music, and so they create more music. They invest more time and money to create, and even the quality’s gone up. We used to get some really bad quality videos. Obviously, it is all business in the end, and it’s all economies of scale and economics. What was happening was for local pop artist to produce records and videos and spend a lot of money on that was not worth it, because nobody would play their videos. But, now MTV is playing it, so they have started spending. And then, they get popularity. They start selling records. They start spending more money on more videos. And, today we’ve got so many Indian videos, and we don’t have place to play any international video. Oba: Why do you have the same programming feed for both Singapore and Malaysian markets? They might have different preference for music programming. Varma: You are right. They do. On various levels, they do, but there is a nice mix of audiences in Singapore. You have a very strong Malay-Indian population. You have a very strong Chinese population, and you have a very strong expatriate English speaking population. In Malaysia, obviously you have a predominantly Malay-Indian population. But, you do have a strong Chinese population as well. So, you actually do have very many similarities in the two markets. Also, this is our headquarters, and I don’t think that right now we are in a position to create one separate feed for Singapore and one separate feed for Malaysia. I think when the business opportunity comes up to do that, we will do that, but it obviously is not one of our priorities. When we were setting up in Hong Kong, we didn’t have a separate channel for Hong Kong. We use the Chinese channel for Hong Kong in China. But, there is a strong case to argue that in most of China, they speak Mandarin, but towards the south of China and certainly in Hong Kong, they speak Cantonese. And, in Hong Kong, there is a very rich Cantonese music market. So, there is a distinct need for us to create Cantonese-based programming channel, which we haven’t done as yet. Oba: I checked the programming line up of StarHub cable TV in Singapore. They offer two MTVs, one is MTV Southeast Asia, and one is MTV Mandarin. Which does MTV Mandarin mean, MTV China or MTV Taiwan? Varma: MTV Taiwan. That’s because again these are some of the restrictions that we need to work from our business standpoint. Our deal with StarHub Cable invites us to have two music channels. So, if we start playing a lot of

268 Mandarin music on the SAM channel, the Singapore and Malaysia channel, which they call the Southeast Asia channel, then there is no need for them to have a Mandarin channel. So, from a business point of view, from a commitment, and from a deal point of view, there are two separate channels we are looking for. That also restricts us from playing too much Mandarin music onto our channel. Oba: I know about 75% of Singaporeans has Chinese origin. So, I assume they prefer MTV Taiwan rather than MTV SAM. Varma: It’s surprising. It should be correct but not necessarily the case. We get more ratings for MTV SAM than we do for MTV Mandarin. I think that’s because even though their origins might be Chinese, they are very cosmopolitan country, and most kids speak English and are very aspiring to what’s happening out there. In terms of creativity and experience, they are very eager to know what’s happening everywhere else. So, in fact, some of our long form shows from the U.S. have rated very well in Singapore and Malaysia. Oba: As for MTV SAM, do you have all programs in English? Or, do you have any language customization? Varma: Most of the programs are in English with the exception of a very few Mandarin programs and one or two Malay programs. But, most of it is I would say 80% to 90% of English. Oba: Do you have some programs produced by foreign MTVs like programs produced by MTV Taiwan, MTV Japan, or the U.S. MTV? Varma: MTV U.S. and MTV International, of course, lots. MTV Japan, not consistently but very often, like the MTV Japan Video Music Awards will play here. MTV Taiwan is more, because a lot of the artists who play on MTV Taiwan are very popular in Singapore as well. They are all the North Asian big stars. A little bit of Korean as well. So, it’s a mixture of stuff. But, it’s not to say that if a program was successful and if we thought that it worked for this market, we could use it. That’s not a problem, but we are even considering doing a chart show for Hindi film music in Singapore, because Hindi film music is quite popular in Singapore and especially in Malaysia. Oba: Can you give me approximate ratio of programming coming from other MTVs to MTV SAM? Varma: On MTV SAM, 60%. Oba: So, 40% is produced by… Varma: Either produced here or back to back to music and things like that. Oba: What’s the main reason you offer foreign MTV produced programs on MTV SAM? Varma: Because I think that some of the shows produced in the U.S. are very groundbreaking formats. Their shows have been very successful internationally, and now because of online and access to the Internet, kids learn about these shows very fast and want to have a look at them. About three or four years ago, I didn’t think some of our international shows were as successful as they are today. There have been some hits and misses to be fair, but “Pimp My Ride” is obviously globally very popular. “Punk’d with Ashton Kutcher” is very popular. “The Osbournes” is very popular here. I think all the big international shows are very popular here. There are some of

269 the newer ones that we are also adding on the channel, like even in the way it drops in the project, for example. Oba: What’s your relationship with MTV Networks in terms of supply of programming? Can you get whatever you like for free? Varma: Yes and no. I don’t program for any channel, but all the programs across the region report to me. So, my colleague collects all the information from international and all the shows that are available, and then we distribute it to all the channels in the region including Australia and New Zealand. So, the answer to your question is yes. All the shows are made available. Some shows in the U.S. today are co-produced with third parties. When they are co-produced with the third party, it is possible that there could be a small fee applicable to that acquisition. But, I would like to say 80% to 90% of the shows are available to us at no fee. There are two ways you can get the shows. One is you can take the actual show, and the second thing you can do is you can take the idea and make it yourself here. Oba: When I had an interview in MTV Taiwan’s director, she said basically Taiwanese viewers don’t like American programs much. CEO Sasamoto at MTV Japan also said the share of the market that wants to see American program in Japan is very small. He said it’s probably about 10% in Japan. How about the situation in Singapore? Varma: I think it is much higher, but there is two ways of looking at that. That’s what I was saying that sometimes it’s the idea that works. Let’s say, Pimp My Ride wouldn’t work in Japan, unless you do it in Japan. That’s what I am saying that sometimes the idea is so strong that you need to apply that in the local context. If tomorrow you created a Pimp My Ride in Japan, I’m very confident it will be successful if you have the right host. I know how much Japanese kids love their cars. Honda and everybody there have racing team there. So, if you would create a show to pimp cars in Japan, it’s going to be successful. I will bet my money on it. But, if you carry the American show or the U.K. show, it won’t be as successful. So, yes, I agree, but no, I don’t agree. The same thing in Taiwan. Taiwan market is very influenced by the American market. Basketball, hip-hop, all are influenced by America. But, what the Taiwanese do very well is they translate that very quickly in their own context. And, I don’t only mean language. I mean making it more relevant to them. So, the biggest hip-hop artist for Chinese audience is still Jay Chou. When he does hip-hop, he will sell ten times more than Eminem. And then, the same thing is shows. I think they are right in saying that if they were to take a lot of American shows and put it on MTV Taiwan or MTV Japan, it won’t be successful. But, the first step is to add a subtitle or dub the show, and the second step is to create the same show in Japan or in Taiwan. Then, it would successful. So, I agree with them, but there is a caveat. Oba: In reality, there are some programs produced by MTV Networks and offered on the global scale, like the Osbournes or Pimp My Ride. Do you think those programs are produced intentionally to target worldwide audience or are they made initially for viewers in a specific country like for those in the U.S. and then just export to other countries or markets? Varma: It is very difficult to create a show that will be successful in multiple markets. The successful show is to create a show that works in your own market because of the hype it creates in your own market. You can then export it. So,

270 to answer your question directly, every show that is ever produced is produced for a singular market. It is very difficult to come up with a concept for a show that works in more than one market at one time. I am trying to think of a show that has had that success. Even “The Amazing Race” hasn’t had that success. The Amazing race is a pretty popular show. You look at “CSI,” which is today one of the most talked about shows globally. It is made for one market, but it exports itself really well. You look at “The Office,” a classic example, a show produced by the BBC in the U.K. It’s very funny, and a lot of people added the show on their channels. America added on their channels, and now they make their own version of the Office. It just explains to you the theory. The Osbournes was made for MTV U.S. It was such a phenomenon success that people started saying, “I want to see that,” and they started seeing it. But, it is made under any circumstances with intention of appealing to one market. You will see what happens there. From a programming strategy point of view, if you were trying to please Goro san in Japan and Mr. Kim in Korea, I am trying to think of an idea that works for both of you. That means I am definitely not satisfying anyone of you 100%. So, I rather satisfy Goro san 100%, and then you say, “Why is Goro san so happy with the show? I want to see.” I will show it to you. Oba: I think the Music Video Awards show has a kind of universal appeal, though. Varma: It does, absolutely. A music award is the only thing that has opportunity to travel. We do “The MTV Asia Video Music Awards,” which is quite successful across the region. If we were to play only international artists and Taiwan artists, Taiwan will love the show. But, Taiwan has a problem when they see an Indian artist. They have a problem when they see a Thai artist. So, you will always have that one problem. So, if we wanted to make it really successful, we should play 10 international artists and two local artists from each market and give them separate edits of the show. It is possible, but it’s just a headache. Yes, it has more range to travel. That’s like a music video. I don’t consider that a programming format, because it’s like a music video. You get a music video Britney Spears will play in every market, and everybody likes it. Now she is not making the song, though. You can say that she is making the song to make sure she has got global domination with the song, but her primary market what she sings about and what she talks about is the U.S., which is her home market. When Ayumi Hamasaki creates a song, she doesn’t think about exporting it outside. She first wants it to be a hit in Japan. When it’s a hit in Japan, she tells people, “OK, now it’s a hit. Please try and sell it for me in another market.” Even music or anything you do, you will always want to make it a success in your market. Like when you do your book, you probably will do your book in Japanese, release it in Japan, and if it’s successful in Japan, then you want to release it in another market. Oba: Do you think music programming is in general able to get across the national boundary easily compared to other types of programming like animation or sports programming? Varma: Sports cross. You play a football for practically every country in the world and want to see it. I think there are shows like sports, music, and, not as much but also animation have more possibility to transcend different markets than anybody else. The thing is music. That’s good as that if you don’t understand what the artist is saying, if you like the beat of the music, you

271 still appreciate the song. That’s what music transcends. But, when you are watching football, you don’t care what language they are speaking. You just want to see the game. In any sport, you want to see the game, and you don’t want to hear anything. And, anywhere in the world that you watch the game, you are probably getting commentator speaking in their local language, so that’s localized. It’s no longer international. The same in music. I guess music does cross. It does cross out boundaries, but again, if you go across the region, you will see outside artists sell different numbers in different markets, like if you go to Indonesia, it’s a very rock heavy market. If you come to Singapore, singer-songwriters are much prolific and also sell much more. If you go to India, international artists don’t sell so much. It’s all local artists that sell. So, it really depends. So, to create one music block that works across the region is very difficult. The music probably then have to be different. So, if I was to play the same songs on half an hour block in all the markets, I would be very surprised if I get the same ratings in each of those markets. Oba: What is the specific characteristic of Singaporean’s taste for music programming in general. Varma: It’s very varied. I think that there is a huge taste for international music, but there is also quite a wide spread, because, like you said, 70% to 75% of the audiences is of Chinese origin. They want Chinese repertoire. All the big artists especially from Taiwan are very successful in Singapore. So, I think it’s quite balanced in terms of the music. Oba: Compared to other Asian markets? Varma: Yes, compared to other Asian markets. Like I said, if you go to India, 95% is local music. If you go to Taiwan, 90% is Chinese music, and the same thing in China. In Taiwan, they watch a lot of Japanese and Korean music and, of course, International. So, about 20% of music that we play on the channel is a mixture of Japanese, Korean, and International, and the rest is all local music. In Thailand, 70% to 80% of it is local music. In all our channels across the region, it’s minimum of 80% local music. Two channels are different. Philippines is where also there is a lot of English spoken music that’s played. So, I would say that in Philippines, we have about 70% of local music and, in Singapore, local music is very low. It’s maybe 30% or 40%, most of it coming from Malaysia and not Singapore. Don’t forget that an artist is relatively successful in Singapore, because the market is so small. They usually export themselves to Taiwan, like Stephanie Sun who is one of biggest female artists in the region. She signed to the label in Taiwan, not in Singapore. Oba: Do you mean it’s sometimes hard for Singaporean viewers to get only the domestic music, because the amount of local music is very small compared to other markets? Varma: Yes, absolutely. But, I don’t think they look at Taiwanese music as domestic music as much as they look at it as language. They look at it as Chinese music and international music. There are 10 or 15 artists in Singapore who sing Mandarin and are releasing albums. It’s not much more than that. In your own market like Japan, for example, thousands of artists are releasing music. And, in the end, there are few artists in Malay, but obviously if you were to sing in Malay, you are better off singing in Malaysia. You make

272 much more money there. So, it’s unfortunate, but this is not a big enough market for an artist to create a career here. There is a good artist called Ado in Singapore. Stephanie, like I said, is now signed to the label in Taiwan, but Ado has still signed with the label here in Singapore. But, obviously he spends his lot of time in China and Taiwan, marketing his music, because that’s where he will get his money from. In Singapore, you will do really well if you sell over 30,000 units, and you can’t make a career out of that. So, you have to sell it in China, Taiwan, Hong Kong, and all other Chinese speaking markets, to try and recover cost of the record and also make some money for yourself. Oba: People in general speak Mandarin Chinese rather than Cantonese Chinese in Singapore. So, Cantonese language music is not so important here. Varma: Not as important. Don’t forget that still the phenomenon in North Asia is especially the Chinese speaking markets. A lot of your artists are also film stars. You might get an artist like Sammi Cheng who is a big Chinese film star and also a top Hong Kong singer. But, she can never be as popular as Stephanie Sun, for example. Oba: So, if Chinese singers try to become more successful, they have to sing in Mandarin Chinese even if they are originally Cantonese. I think actually that’s what most of Hong Kong singers try to do. Now, for Hong Kong singers, it’s common to sing in Mandarin Chinese. Varma: Right. There is an export market for Cantonese music like I said, but in Mandarin, you have far more. I think even if you go down to Thailand, to Malaysia, or to Indonesia, all the Chinese in those countries are more Mandarin speaking Chinese than they are Cantonese speaking Chinese. Oba: Let me ask you something about advertising. I think you have two main revenue sources, one is revenue from advertisers and one is from multichannel platform like cable operators or satellite broadcasters. As for advertisers, you may have pan-Asian regional advertisers as well as very domestic advertisers, which want to reach a specific country market. Which one do you have more? Varma: There are a lot of global or international brands that advertise on all our channels. Don’t forget that our channel is perceived to be more of an A+ and B+ audience profile. So, there is a certain kind of a product that you would see on a channel. If you go to our India channel and you see some of the commercials on the India channel, they are very different from commercials on some other channels in terms of the kind of products. You have a lot of regional sponsors like Motorola, Toyota, and brands like that. Nokia wants to align themselves with the youth across the region. So, you speak to MTV as a region. But, in certain markets, you might want to do a local. There are certain companies like Pepsi or Coca Cola. They are changing now again, but until a year or two years ago, they were doing no pan-regional purchases. So, we had Pepsi buying on many of our local channels. We had Coca Cola buying on many other local channels, but we didn’t have a pan-regional Coca Colas, because they were not spending like that. When Toyota makes a decision to spend on MTV, the decision comes from Japan. But, if Toyota Thailand wants to do something with their office, the decision comes from Toyota Thailand. So, it really depends. In a certain scenario, if you take

273 Toyota India as an India client, then the local advertising is far greater. If you take Toyota India as part of a regional client, then the region is far greater. Oba: What’s the common request from advertisers in terms of programming? Do they have any special request or demands for your programming? Varma: Not really. I think a small advertiser looks for a small brand fit. Oba: What does that mean? Varma: For me, MTV is a very unique brand where MTV talks to the kids 24 hours a day. When you go to an entertainment channel, you buy into a show, specifically because you get an audience to that show. With MTV, you get an audience that comes in and out all the time. They are kids and very flipping. So, I am not doing anything for half an hour. That’s what you do. It’s not pre-planned. I have a certain time that I watch AXN, for example, on Sunday, because there are some shows that I like that are coming on that time. That’s a more adult audience. That’s an audience for a very entertainment-based and time slot-based channel. MTV is not yet that kind of channel. So, I think that the brand would look to align itself with MTV so that when MTV talks to an individual or more of the youth across the Asia, then they are saying, “Oh, MTV is somebody that I listen to, and this brand on MTV must be pretty cool. It must be a brand that I should associate myself with.” So, it does not really matter which show that they are there. It more matters that they are there in principal. However, having said that, there are certain brands that also look for a further association. So, they look at MTV to create an opportunity to bring themselves out of situations. For example, Motorola had a situation where they felt that their brand was established in the market, and you could rely on Motorola, but it didn’t have the wow factor. It didn’t have the edge. And, they needed to align themselves with someone that would endorse them. That would allow their kids to say, “Ah, I should consider this brand.” And so, they came to us. And, what we did was we created something that was very unique to Motorola. I really respect the gentleman, who is driving the Motorola brand, by the name of Neil Stewart. I really respect him for the fact that he walked to our lives and he said, “This is my brand Motorola. It’s a great brand, but it does not have the edge. I now got some new products that have the edge. I want you to tell the kids that I got this product that has the edge.” So, we said, “What are you looking for?” He said, “I don’t know. You do. It’s your channel. you decide.” And, that was really good, because what he did was he trusted us with his brand. We came up with some really over the top ideas to send the message that Motorola is not an old people’s brand. And, when we did phone that was an MTV Motorola phone, the numbers of the phone jumped by 600% the sales. So, he has been with us ever since as an advertiser on the brand, and we together have developed a property that works for both of us. So, that’s a good example of how an advertise should and could work with MTV, and that’s sort of right way to work with MTV. You are part of the landscape and find a unique hook point within the landscape that you sort of make your own. MTV and I bring you this experience. For example, with the Motorola phones, we made a commercial where we had all these noises of people farting and burping, saying, “Use these as your ring tones on your Motorola phone.” Motorola person looked into and, “Oh my god.” But then, we said, “Trust us.” 600% increased. Frankly speaking, only MTV would have

274 thought of doing something like putting a fart as a ring tone. So, we do crazy things, and that’s what people or brands come to us for. And, we are for the audience as the first stop for music and music information. So, it is very important for lot of the brands to be with us. Oba: How is the MTV brand perceived by Asian viewers in general and Singapore viewers specifically? What brand image do they have toward MTV? Varma: I think the brand image that they have is “It’s my MTV” because of the localization. It plays music that I like. It’s relevant and creative. It’s aspired, because there are lots of things that happen on MTV that you would want to do. And, very importantly it’s very real, because the faces you see on MTV are very real faces that are from your own market. That’s really important when you have a host hosting a show. In Japan, when you see the channel, Japanese people are hosting the show. When you see it in Singapore, Singaporean people are hosting the show, and that makes a big difference. That makes it real, that makes it mine, and that makes it believable. So, I think MTV is still definitely the preferred choice. To be fair, we do have some competition in some of our markets, but in most markets, we don’t have any competition anymore. In fact, we don’t consider music channels as our competition. We consider mainstream television as our competition today in most of our markets. In some markets like in Thailand, in Philippines, and in India, we still have Channel [V]. There is a local channel in Philippines, which is competition for us. I still think that they look at MTV for information, for aspiration, for relevance, and for creativity, and don’t forget all reality shows that you see today. It first started with MTV with “The Real World” many years ago. They look at us for something new. It’s like only MTV could have thought of that. It’s difficult, because the audiences are very picky nowadays. It’s difficult to make them happy. Oba: Are you making any efforts in programming so that you can maintain those brand images? Varma: Yes, that’s part of my job as long as my colleagues is to come up with new ideas and new execution of pop shows that would work across the region. If anybody tells you from a programming point of view, it’s all about ideas, ideas, and ideas. I think there are some basic formats that work. Every idea that you see is an extension of that format. So, it’s not a rocket science. But, the thing to do is to push them, and we are constantly looking at opportunities and ideas. We can present it in a different format that makes it more intriguing or exciting for people. What is the most popular thing in most markets are talk shows. On every channel everywhere it’s a talk show, but you keep looking and say, “Oh, this one is great. What’s the difference?” They are all talk shows. In Japan, you have thousands of talk shows, and you have thousands of those entertainment variety shows. All are the same format, but you prefer one or the other, because either the host is very good, or the guests are very good, or whatever it is. But, there are not many different formulas. They all are very same everywhere you go. But, how do you create the opportunity? I think the success for me is to find the obvious and just make people realize that. So, where you do it with the Osbournes, the obvious was, “Oh my god. This family is completely mad.” If they allow me to show the world how mad they are, I would be really happy. So, the world got mad. Seriously, you just look at the obvious, and you take away from that.

275 You look at Ayumi Hamasaki, for example. Today, she is still very popular, but three years ago, she was a mega star. Anything you do with her would be successful. So, even if you just do the half an hour show of Ayumi’s dress, how she makes an album, how she records an album, and how she does her marketing, for every kid in Japan, it will be amazing to see that. “Wow!! This is what she does. This is what Ayumi does in the morning, in the afternoon, in the evening, and in the night.” It’s not a great idea, but because I know that every kid in Japan loves Ayumi, I just want to find the way to get Ayumi on the channel. When the World Cup was going on, if she did shows in the World Cup football, everybody will be watching. So, it’s getting the right timing, understanding what the people want, just putting those all together, and then presenting it in a form that nobody has ever presented it before. That’s it. What I will do is, if she gives me permission, I would do a search in Japan to find Ayumi’s boyfriend. Can you imagine if MTV suddenly said you get a chance to be Ayumi’s boyfriend? You have to do this, this, and this. You know how many people will stand in line to become her boyfriend…thousand of people. Who becomes her boyfriend is not important, but the fun you will have is what they are willing to do to become her boyfriend. You tell them to jump off a three-story building, and she might go out to dinner with you. Then they’ll jump. So, I am just saying that you can use just the Ayumi phenomenon and try and cover up with 20 ideas to make it exciting. I think the success and what we always look at is to find out. Like I said, it’s not rocket science. It’s just to be able to find out what’s the topic of time, what’s the buzz at the moment, or what can be the next buzz at the moment. And then, use that as a tool to create something that’s linked to that. And that’s what constantly change it and constantly adapt it, because our audience is today not patiently willing there to see the same thing again and again and again. Oba: I heard there were a number of Ayumi Hamasaki’s followers all over the Asia. I still don’t know why she became so successful all over the Asia. She basically sings in Japanese, and in my view she is not necessary the one and only superstar in Japan. Varma: I remember when she came to perform for us in Singapore and when she came in, there were so many people outside. Sighing and screaming fans. They came one day before, waiting for her to come. I think the package is very important. What Ayumi did very smartly is that every time she came out with music, she had a different image. I think that she made herself so successful from an image point of view, and the music was also so good that if she put both together, it’s like Madonna. Madonna will hate me for making the comparison, but you think about Madonna. She can’t sing, but the package is fantastic. Look at Brittany. She can’t sing, but the package is fantastic. These girls very successfully present themselves very uniquely every time they come out with a piece of music, and they market themselves really well. So, whoever does their marketing is very smart, because if you actually think about it musically, it’s nothing exceptional. You listen to this artist, Ayaka, when you go back to Japan. She is very new and signed to Warner Music. She is 17 years old and fantastic. Now, will she be as successful as Ayumi? I don’t know, because she does not have that package. She is a true singer-songwriter. She writes on her own music. So, she will not

276 dress like a doll, which will make it more difficult but will take longer. The thing about people like Ayumi is that Ayumi will peak and fall and peak and fall: image, release, peak, and then fall. People like Ayaka will stay. She will be stable. You will enjoy the Ayumi phenomenon when it’s there, but when it’s not there, you will forget about it. But, you will always remember a good artist. Do you remember Spice Girls when they were there? Everybody bought the album. Nobody listens to it anymore. But, you rotate. You listen to it all the time. Oba: What’s interesting is Puffy, a Japanese duo, is very successful in the United States right now because of their animated films. But, I think Puffy is probably not so popular as Ayumi Hamasaki or somebody else like BoA in Asian market. I think the difference between these cases resulted from the difference in preference between Americans and Asians for females pop artists. Varma: I also think it might be just the success of the animation in America. That helps the artist. Did you ever hear of the phenomenon that was called F4? It’s a funny story. There was an animation series in Japan called “Meteor Garden.” I don’t know what the Japanese name is. That series was then taken over in Taiwan, and they made it real life. In real life, they hired four boys to be the main actors. It was so successful that it was broadcast in every country in Asia except India as a TV series. Sony BMG signed the four boys as artists, and they called them F4. Every time the series was released, Sony BMG would release the album. They sold millions of albums across Asia. In the Philippines, they would sell. They went to the number one in the Philippines in Mandarin. It was not because of the music. It was because the TV series was so successful. Because the TV series was so successful, everybody bought the music. It could be the same phenomenon. Oba: Is it common for Asian viewers in general to perceive MTV as an international or global channel? Are they usually associating MTV with something global or something international? Varma: I think they associate MTV as a local channel that gives them global viewing opportunity, because, like I said, even if you see international shows in Taiwan, they’re all subtitled or dubbed into Chinese, and the same thing is in Korea and in Japan. So, even though you know it’s an international show, it’s being played to you in a local context. So, they look at MTV as their channel, which means a local channel that plays their music and international stuff that they like. Oba: Then, what does globalization mean for MTV Network? Varma: If a globalization strategy was to be really accurate in my mind, I think that there is a great value to have an overall strategy and be into the overall brand. But, I think that it needs to be executed very carefully. With MTV, I think you need to have some core brand values that are unified across the world. If you don’t steer away from those, people might look and feel different in each market but globally say the same thing. The best litmus test for doing something like this is to ask kids in Singapore, kids in Taiwan, kids in America, kids in Poland, and kids in maybe Mexico. Ask them all the same question about MTV. If all the answers are the same, you got a global brand. If all the answers are different, you don’t have a global brand. Just by calling it MTV doesn’t make it a global brand. It needs to translate into the same

277 thing. So, I watch MTV for music. If all the kids say that, MTV is music. I watch MTV, because it’s creative. I watch MTV, because it’s relevant. I watch MTV, because it gives me my best shows. Whatever those qualities are and whatever those brands are, it’s got to have the same answers when you ask the question in any market. That makes it a truly global brand. It doesn’t matter whether it is a red color, it’s a green color, or it’s a blue color. It depends on your translation. For me, as a television channel, it has to mean the same thing for each person around the world. If it does, then you’ve got a global brand. If it doesn’t, you don’t have a global brand. But, there are two ways of looking at it. When you talk to Coca Cola, they will probably say something different. They’ll say, “I don’t care what anybody says. It’s got to be red. It’s got to have this.” It’s like Nike. It’s got to have the Swish. I don’t care what it looks like. But, Nike in each market can create products in each market that are unique to that particular market. As long as it has the Swish, it makes the connection. So, it’s different applications. For me, this is what I think MTV should be. Starbucks is completely opposite to what I said. Starbucks’ whole mantra in life is that I get the same experience anywhere in the world. So, I get great coffee. I get the same environment when I’m in the shop. I pay the similar price. The cup looks the same. The coffee tastes the same. And, there are a lot of people who argue the same. But, I am in China, and how come it tastes the same? For me, it’s fantastic, because I love my coffee, and anywhere in the world, it tastes the same. For me, that’s one of best companies in the world. Oba: You mentioned glocalization earlier. I wonder if it is difficult to maintain the global image while attempting to cater to local preferences or local demands. I think there are some kind of conflicts or disagreement between the global image and the localization of content. Varma: Yes, they could. I don’t know if there are any conflicts. I think that when they see an international show and when they see a local show, they absorb it very differently. When they see an international show, they see it as an international show, and then they look at it as a wow factor. “Wow, this is what they do there.” When they see a local show, it’s more about part of what I do. This is part of what can happen to me. So, I think the acceptance or the message that is given in both cases is very different, but both are accepted. I think they do want to know. They want to be hip and cool. So, that’s the kind of thing that I think kids today are very greedy and want information. They need information over and over to make themselves significant, if not successful. They just need to exist. And, to exist today, you need to have that power and knowledge, and they want that all the time. So, they would want it in various levels, and the entertainment is one key factor. Music and sport are two grids where people draw off the boundaries, and they can communicate and speak one language. You will always find a commonality with music. You will always find a commonality with sports. So, there are certain kinds of music, and there are certain kinds of sport that are very equal along the world. If you are a football fan, and I am a football fan, we’ll start talking about football, and we’ll go to our own countries, we’ll go to the European League, then we’ll go to South America maybe, and you don’t know how far you will go. So, basically what I’m saying is that they do want that knowledge of what’s happening out there, and they very importantly want

278 not to lose the knowledge of what’s happening in their own market. That is why they want to listen to international music as well as they love their local music. Oba: Do Asian kids in general are curious about whatever exciting regardless of where it has happened? Varma: Right. I really believe that they are no longer satisfied with the basic knowledge. I think what they learn on the Internet in many cases is far more relevant than what they learnt in school today, because you get lots of applications when you go online and you do your own research. Oba: Sharon Chang at MTV Taiwan says that MTV always needs to import and introduce some fresh and new things into local market, even if they might not be so popular to local viewers. She says that’s MTV’s attitude. I wonder if this policy made something go against MTV’s localization strategy, because they might not be necessarily accepted by local kids. Varma: It will go against the localization policy if you are not willing to accept you made a mistake and then change it. So, if today we see a new show in the U.S. that we know has been successful, that’s not the level of the Osbournes or Punk’d or something where the whole world knows how successful it is. There are some other shows that I believe have been successful in the U.S., but they haven’t yet come as terms of mainstream knowledge outside of the U.S. We’d be very happy to air that on MTV, because it’s one of our products. If it doesn’t work, we’ll be very happy to remove it as well. I think that one reason why we’ve been accepted with our audiences is also because we are quite honest. In a sense, if something doesn’t work, we’ll simply say, “Fine. It didn’t work. Sorry, we’ll give you something else.” And, I think if you are willing to accept that, then that’s good. That’s what we need to do especially with our audiences who are very, like I said, constantly wanting more information, more creativity, and more relevance. They look for changes every single day. So, if it’s not working, then we’d be the first one to say it’s not working and get out of it. So, I don’t think it goes against the localization strategy as long as you’re identifying the right shows for that particular market. The key is to really know who your audience is, what they want, and what could excite them. In all our markets, we make it a very serious point to continuously check with our audiences. So, research plays a big part in our life. Oba: In general, how important are Asian markets for MTV Networks? Varma: Very important. It’s definitely one of the growth markets. I think there are lots more we can do in each one of the markets. There is more local production that we can do in each one of the markets. So, it’s still on a growth curve. MTV has shifted the dial in the U.S. If you go to the U.S., people complain that they don’t play music on MTV anymore. You have 10 or 15 videos in a day. Here, you still see a lot of music on our channels. I think you will see a shift in the programming, once the audience is ready for it. I think you will see more local production. I think we are certainly a long way to go and have lots more to get down. And then, there is a whole digital strategy that will come into play. Plus, there are other channels that we would launch. We’ve launched VH1 already in many of our markets, Thailand, India, Australia and New Zealand, and then we adjust some blocks that are sold separately.

279 Oba: MTV Taiwan has some programming block on the evening for VH1. Varma: Right. Oba: I suppose you as an Asian headquarters play a role of kind of an intermediate between the MTV Networks International and the local channels like MTV Japan, MTV China, or whatever. Then, what’s your response when there are some disagreements between MTV Networks and the local perspectives on programming? For example, MTV Networks tries to put a particular programming on a global basis, but some local channel says, “No, it was not acceptable in this market.” Varma: It’s a difficult question to answer, but nine out of ten times I will support the local channel. I will respect the person in that market, because that person would have the best knowledge of that market. There are some shows that I believe can have traction in a local market, and so sometimes I would step in and ask them to carry something. But, very often I tell MTV International, “No,” because I really believe that it is very important. It firstly is very rare for that to happen. The way we operate is that MTV U.S. will create a program that they think has been successful. Very rarely do I get a call from MTV International, saying, “You have to air this show.” Sometimes, I get it for pro-social messages, and I even reject those. I don’t even go to the channel sometimes, because I myself can tell that it’s not going to work because of a pro-social message that is made in the U.S. especially about the situation of the world today. I keep explaining to them that we broadcast to markets like Indonesia and Malaysia, which are very Muslim heavy. And, something that might make sense in an educated adult market in any part of the world, if you are playing it to a Muslim audience, would not mean the same thing. So, I will not blame that market. When 9/11 happened, I remember they did a one-hour special on what happened in that market, and I refused to play it. And, I had a problem, because the head of the company got really upset with me, saying, “How can you say no to something like that?” And, I said, “There are a lot of Muslim people here who think differently, and I am not about to put our channel and our people at risk, because you think it’s the right thing to do. I am sorry.” When I explained it to him like that, he understood. There are certain shows that are a bit too risky for some of our audiences in Asia. We do have to be concerned with cultural sensitivity, something that somebody might feel. And, you see this is another thing that we very conscientiously do. We pay attention to how something might translate in a local market, and if we think that it’s not tasteful, then we won’t air it, even if it means it’s successful. So, even with the Osbournes, we were wondering in some of our markets, like in Indonesia, whether we were scared. And, we had a bit of a debate between my Indonesian colleague and myself, saying if we should air that, because it can be perceived as entertainment, but it can also be perceived as “Look. This American channel is doing all their nonsense again, spoiling the minds of our youth and stuff like that.” So, you have to be careful. You have to pay attention to these requirements, and you have to strike that balance. So, I think that some of our shows in Indonesia do far more successful than any of the other markets. But, the kind of shows you air in Indonesia are different than the kind of shows you’ll air in Korea or in Taiwan. In the month of Ramadan, we completely tone down the channel for Singapore, Malaysia, and Indonesia,

280 because that’s their holy month. We have to pay respect to that. And, we don’t even play videos with women in tank tops and stuff, because we respect their ideologies and their religious beliefs, and we don’t want to push it. So, I think that is recognized not only by the governing authorities in that particular market but also by even the audiences that we are mindful to. In MTV Indonesia, five times a day on the channel during the Ramadan month, we break for the prayer. We actually read the prayer on MTV. Which MTV in the world would do something like that? And, most people from America would be like, “How can you have prayers on MTV? Are you mad? That’s not MTV. That’s not cool.” For Indonesian, it is. Oba: So, you have much autonomy or freedom when you decide your programming independently from MTV Networks International, and also you give much autonomy or freedom to your affiliates like MTV Japan to decide their own programming. Varma: Yes. Oba: MTV Japan is a joint venture, while MTV Asia is 100% wholly owned by MTV Networks. Vaama: I don’t know if it’s public knowledge, so please be careful, but MTV Japan is now no longer a joint venture. But, yes. Till such time, it’s a joint venture. We have a deal in Indonesia, in the Philippines, and in Thailand. Otherwise, all our channels are 100% owned by MTV. We’re just having some structural changes in our company as well. Basically, our President here will be the head of MTV Networks Asia Pacific. So, all the channels from New Zealand to Japan will fall under this headquarters. Oba: What’s the advantage to be part of a global television network like MTV Networks? How can you take advantage of the global network? Varma: I think one of the biggest advantages is the people. I think you have some really amazing individuals all over the world that you can share. I recently helped somebody from America who works with our Korean channel. He’s brought a lot of assets to it. One of my colleagues from this office is sitting in Japan right now. So, I think to borrow talents from different parts of the world and allow them to share their vision in a local context. Somebody from, let’s say, Mexico comes to Singapore and starts programming in a Mexican style. I think it’s a Mexican translation of what’s happening here that makes it very exciting and makes it very unique, which makes it very different and gives it a different perspective. It’s still local but gives it an international flavor. I think that’s very important, and I also think through these people, I have come across some really unique ideas that had worked. Markets like Europe and markets like Latin America are very similar in many ways like Asia. So, I’ve been able to use some of the experiences that they’ve had in those markets and translate them into an Asian context successfully. That’s really important. Also, the fact is that there is a whole library of material being created every day amongst all our channels around the world, and there are now 100 plus channels around the world. They are all called MTV, so I can borrow MTV from anywhere and put it onto any of our channels here in Asia. Some of our spots that we’ve created in Asia have played in other channels around the world. So, that’s a great advantage that I have. All our channels have a library to choose from. That’s a big advantage. Another advantage obviously is the fact that MTV is one of more powerful brands in

281 the world, and you are part of that family. It helps you in simple negotiations. It helps you in a lot of other things. But, apart from the fact that it’s a great company that is run really well, I think the success of MTV always lies in its people. And I think strangely the humility and the humbleness of the people is part of its success. So, MTV is being as relevant and creative as it attracts a lot of creative people, and that is great. You get these creative people all over the world who are dying to work with MTV, because MTV allows you to express yourself creatively. MTV pushes the boundary like no other networks do. Many advertising people have some great ideas and want to do these great things, but they can’t do it, because that particular brand won’t let them do it. But if you come to MTV, we’ll let you do it. Oba: You mentioned human power resources, content resources, and brand resources as well. From the perspective of cost reduction, which one, localization, I mean producing content for each market, or sharing content among some markets, is more efficient? Varma: Obviously, if you take the same show and play it in 10 markets, it is going to cost less than producing that same show in 10 markets. But I think if you would take an international show, translate it, and put it into ten markets, then the revenue that you can get from them and the ratings you get from them would be far less than if you would have produced the same show in each market. It will be more expensive, but your revenue will probably be higher. So, if you want to define cost efficiency in relation to P&L (profit and loss), then creating your own product on the ground would be far more effective. But then, on the other hand, if you were to take one show and play it in all the markets simultaneously, you don’t need so many people. So, you bring your operational cost down, which means your revenue needs to be less. To me, if you do it right, localization process is bound to be richer in revenue. Oba: I know global TV networks like Cartoon Network, Discovery Channel, or ESPN make their local affiliates to contribute to or to make an investment in the development of the programming content, and their programming is shared among those affiliates. Is that the case for MTV? Varma: Not necessarily. We’ve done some, and we’ve not done some. It really depends. We have the mother ship, which is MTV U.S. that creates some phenomenal shows for the U.S. market, which are so good that they work in other markets. That’s fine. And then, if we think that an idea is really good, but it doesn’t work in its original state, then we take the idea and create it again locally. So, we don’t have too many situations where we need to contribute financially towards the product. It’s very rare.

282 APPENDIX I INTERVIEW WITH CARTOON NETWORK JAPAN

March 16, 2006

Oba: Is all of your content made up of animations? Suetsugu: We have celluloid, 2-D animation, clay animation, and small number of puppetry-based programs. We are purely an animation-based channel and have no live-action content whatsoever. Oba: What are main supply sources of your programming? Suetsugu: On Cartoon Network Japan, we offer three basic types of programs. The first type comprises original Cartoon Network programs, which are principally animations made by Cartoon Network U.S. These are then translated into Japanese and shown on Cartoon Network Japan. We also air a number of animated features made by Warner Television of the Time Warner Group. We have a library of both old and new programs, all animated shows from the Warner Television collection, for example, programs such as “Tom and Jerry,” “Bugs Bunny,” “Batman,” and “Cartoon Classics.” Finally, we have what we call “third party” content, which is all content from neither Cartoon Network nor Warner Television. These programs have no real affiliation to any network but are purchased by Cartoon Network if they are thought to meet with our programming standards. An example of this type of program that we are currently airing is “Pink Panther,” which we purchased from MGM. The animated version of “Mr. Bean” is produced by the BBC. We are able to access “The Charlie Brown and Snoopy Show” from an agency called United Media dealing with the Snoopy brand in Japan. We also purchase content from large production companies such as Dentsu or Canada’s Decode Entertainment. In percentage terms, around 18% of our content is original Cartoon Network material, while Warner content accounts for another 12%, giving us a total of 30%. The remaining 70% generally comes from third party producers. Oba: Do you pay for content from Cartoon Network and Warner Television? Suetsugu: We do. Cartoon Network Japan is not wholly owned by Turner Broadcasting and so operates as a private enterprise under a separate name. Oba: Is there any difference in budget for when you purchase content from Cartoon Network and Turner Broadcasting and for when you purchase third party content? Suetsugu: There’s no hard and fast rule. Third party content may be quite cheap, but on the other hand, there’s some expensive content, too. There are also conditions regarding the length of time these programs are available. Cartoon Network and Turner Broadcasting programs are not especially cheap. There’s no real distinction in budget. We could always cut back on the amount of the U.S. Cartoon Network content, but Cartoon Network Japan, as a part of the Cartoon Network brand, should always be offering a certain amount of Cartoon Network content. And, of course, some of the programs most popular with our Japanese viewers are Cartoon Network products. But, it’s true that we don’t have a minimum percent amount of our programming set aside for Cartoon Network content. Hashida: If we were to have quotas like that, there would probably be problems, such

283 as who would take responsibility when those quotas did not bring good results. Oba: Do you have anything like a shopping list of the programs from which you choose when you purchase programs from Cartoon Network U.S. and Turner Broadcasting? Suetsugu: We choose programs from a huge list of titles. Excluding special cases or circumstances where we cannot broadcast due to copyright concerns, we choose pretty much at will. Oba: Isn’t it difficult to pick out a future hit from all the animation produced around the world? Suetsugu: It’s tough work. We go to the MIPCOM and MIPTV websites to help unearth material. Oba: What sort of things do you think about when you select content? Suetsugu: Whether or not it will please Cartoon Network Japan’s target audience. Oba: What is your target audience? Suetsugu: Our target audience is children under 12 and their parents, men and women, 35-45 years old demographic. Oba: What are the attributes of the viewers that Cartoon Network Japan targets? Suetsugu: In order to be able to view Cartoon Network Japan, you first must have to subscribe to cable television or Sky PerfecTV. So, we attract many families who are interested in culture and willing to pay for access to various programs on top of their over-the-air broadcasting. Hashida: Paying 3,000 or 5,000 yen a month to watch TV is paying money to take part in a cultural activity. A characteristic of our viewers that might be pointed out is that many choose to pay for access to bilingual programs for the sake of their children’s education. Quite a lot of parents want to familiarize their children with English while watching fun programs. We often hear comments like, “Our kids copied some of the English dialogue [from Cartoon Network Japan programs].” It seems that a lot of parents want to expose young children to English programs. We have chosen a number of famous and highly-regarded animated programs for preschoolers from various countries for our “Pipora Pepora” section. Oba: Are the foreign-produced programs all dubbed into Japanese? Suetsugu: As a channel catering to children, our programs are on the whole dubbed, but a tiny percentage of them are subtitled. Hashida: And, the dubbed programs are also broadcast in the original English as dual-language programs. Oba: Which countries are the most highly regarded as producers of animated content? Suetsugu: I’d say the U.S., the U.K., Canada, and Japan. Oba: Are the programs you purchase from Cartoon Network and Warner Television American-produced? Suetsugu: Most of them are American-made. A small percentage of them are produced in Korea under a subcontracting scheme, but for all intents and purposes, they are created in the U.S. We acquire third party content from a number of different countries. Oba: Do Japanese viewers receive the American-produced content well? Suetsugu: We have a wide variety of animation fans here in Japan. You have the one who is into “bishojo (cute, young girl’s)” animation genre and another who is

284 into robot action shows. In the same way, you have fans of foreign-produced programs and those who prefer Japanese-made programs. Yes, there are viewers who enjoy American content. However, to say that they watch only American content is a mistake. In fact, many of them are perhaps not aware of the origin of the program when they watch it. I don’t think it’s even possible to lump all the American-made content together in one group. For example, “Superman” is clearly an American-made program, but “Teen Titans” is produced in the U.S. in a Japanese animation style, and as such doesn’t really come across as American. The characters’ faces and body movements resemble those of Japanese animation. And, sometimes programs, which may look American, turn out to be made in France, Australia, and so on. So, I don’t think there’s a demographic out there saying, “I like this, because it’s American.” The tastes of animation fans cannot be so easily generalized. You get things like, “I like A, but I also like B.” It’s not possible to evaluate animation with simple distinctions like American-made and Japanese-made. Our slogan at Cartoon Network Japan is “animation around the world is here for you.” The diversity of the countries that produce our programs is one of our appealing features. Hashida: Animation is a difficult genre to categorize. Our main viewing audience is children, and children love just about all types of animation. Suetsugu: Little kids don’t usually think about where a cartoon was made when they watch it. As long as it is entertaining, that’s enough for kids. Oba: But, don’t you find there are sometimes concepts in foreign animation that are not understood by Japanese viewers because of cultural differences? Suetsugu: I think Japanese audiences would feel as little discomfort watching American programs as Americans do watching Japanese ones. In general, the Japanese lifestyle is becoming more westernized. Many of the American programs we air on Cartoon Network Japan are based on conventional American lifestyles, so I don’t think Japanese viewers would feel alienated by their content so much. For example, we don’t have many programs dealing with the lifestyles of Native Americans. There’s very little on Cartoon Network Japan, which is complex or difficult to understand. Hashida: For example, we don’t show any satires of the current U.S. administration or other such things, which would be difficult for Japanese to comprehend. Suetsugu: Most of the programs broadcast by Cartoon Network Japan are one, which portray everyday life or are based in outer space or the future. Just about anyone can understand the themes of outer space or the future. Oba: Are there any original Cartoon Network Japan programs? Hashida: Not at this stage. However, Japan Entertainment Network, which runs Cartoon Network Japan, is a joint venture, being 20% owned by Itochu Corporation, and 80% owned by Turner Broadcasting. These two companies have created a mutual fund and are working on producing animated programs. And, there are plans for Cartoon Network U.S. to develop programming in collaboration with Japanese partners. In fact, the robot-themed action serial, “IGPX,” is made by a Japanese studio called IG, which is invested by Cartoon Network U.S. Suetsugu: We also have some older Japanese-made animation on our programming schedule as third party content. Cartoon Network Japan caters to viewers’

285 needs, and, of course, there are viewers who want to watch Japanese animation on our channel. Oba: What exactly are Japanese viewers’ needs? Suetsugu: That, of course, depends on the individual viewer, but our target audience is children up to 12 years old and their parents. These adult viewers seem to like programs they watched when they were younger. Tom and Jerry was once broadcast on over-the-air television. Programs, such as that one, appeal to parents for nostalgic reasons and also to kids, who find them fresh. Younger viewers are interested to learn that they are watching the same programs their parents enjoyed when they were children themselves. This is the kind of thing we consider when choosing content to air, so there’s not really any preference given to American-made programs or Japanese programs. It’s more a case of tailoring to viewers’ tastes. Oba: Programs made by Japanese or with direct reference to Japan seem to have large acceptance among Japanese viewers in other genres, such as music or sport. Does animation fall into this category? Suetsugu: The answer to that is not entirely clear-cut. Hashida: There are some animation-only channels competing in this market. There are those, which broadcast only Japanese-made content, but Cartoon Network Japan is an international animation channel. At present, we have around 4.8 million household subscribing to our channel, so we believe there’s definitely a market for the international content we broadcast. Oba: How many subscribers do you currently have? Hashida: Around 4.86 million households subscribe to our channel. Suetsugu: Cartoon Network recommends its affiliates to tailor their content to their local market. Cartoon Networks in India, Taiwan, and Australia, for example, each feature completely different programming. Hashida: Each international Cartoon Network is entrusted with complete control over what they choose to offer. Each country has different tastes in what they like in their animation, and this is rooted in culture. The understanding is that if their programming was chosen for them by the headquarters, then they probably would not have as much success. Oba: What sort of tastes are rooted in Japanese culture? Suetsugu: Well, it’s actually more accurate to say “market” than “culture.” For example, 20 years ago, Tom and Jerry was broadcast every evening on over-the-air television. Anyone who was a child at that time grew up loving Tom and Jerry. Even middle-aged Cartoon Network Japan viewers love that program. The same goes for Snoopy. Viewers feel a certain familiarity with these characters. Hashida: Snoopy is incredibly popular in Japan among people of all ages. Products bearing the characters’ images are everywhere, and fans are not just kids but also their mothers. This phenomenon has historical reasons behind it. So, if we broadcast Snoopy programs on Cartoon Network Japan, we get great results. Oba: When Cartoon Network Japan chooses content programs, do you worry about any content of a violent or sexual nature? Suetsugu: Of course, we give it our utmost attention. We don’t accept any programs, which have been considered problematic in the U.S. Over there, “Detective Conan” is always aired at a time more suited to adult viewers, although it

286 would be difficult to do the same here in Japan. In that program, every episode begins with a shooting or a killing. Very little Cartoon Network Japan content features death or killing. After all, we have a lot of young viewers, and we don’t want to expose them to such graphic scenes. Hashida: We actually have at Cartoon Network Japan an established standard regarding violent or sexual content. Animation has a wide-range of genres, and while there are a number of adult-oriented programs, our principal audience is children. So, an important point in program selection is whether parents would like their children to watch the program or not. Oba: Don’t you ever choose programs that are a little out of the ordinary? Suetsugu: At the moment, that’s not something that concerns us. However, we have ideas to start offering a small amount of adult-oriented content on a limited basis. Hashida: We are constantly weighing up new ideas, for example, whether to begin airing the adult program, “Adult Swim,” which is aired late night in the U.S. Suetsugu: Adult Swim is a savage satirical animation along the lines of “The Simpsons.” We also air on Cartoon Network Japan the Aardman Animations production’s (famous for “Wallace and Gromit”) “Creature Comforts,” which is more of a program adults will chuckle at than a kids’ show. We air it on Saturday nights. But, because it contains no depictions of violence, it’s also fine for children to watch. Oba: Are there any restrictions on what kind of content can be aired in Japan? Suetsugu: We adhere to the guidelines set down by the National Association of Commercial Broadcasters in Japan. Oba: How about restrictions on the amount of imported content? Suetsugu: No, there are none like that in Japan. Oba: What is your main source of revenue? Hashida: Advertising and carriage fees. Oba: Which portion is bigger for you? Hashida: I’m not at liberty to disclose the exact ratio. Oba: Do platforms such as Sky PerfecTV and other cable television operators provide suggestions regarding programming? Hashida: Those are the people closest to our actual viewers. We get opinions from them like, “Programs like this are popular now,” and “This kind of thing is selling well.” We treat this as one of the forms of feedback we receive. Of course, we also pay attention to the feedback we receive at our customer center and on our website. Oba: What kind of requests do you get a lot of? Suetsugu: A lot of people want us to air bilingual programs. There are a lot of mothers out there who want to expose their children to English. Oba: What kind of advertisers do you tend to attract? Hashida: We get a lot of entertainment industry companies, like movie distributors, for example, and also companies making animation character merchandise. I think that’s because it’s directly linked to our content. We also have child-oriented food and drink companies, and there’s quite a few English language learning material makers. Oba: Do your advertisers ever give opinions on program content? Suetsugu: Not so much. Most of them place ads on us knowing what kind of channel Cartoon Network Japan is.

287 Oba: Is there any movement on the part of the multinational corporations to push more foreign-made content? Hashida: No. Cable television is target media, so we have a greater chance of reaching a certain viewer than over-the-air broadcasting. As a result, I think they choose programs according to their products, for example, products that they want parents to notice and buy for their kids. I don’t think whether they are multinationals or not has much to do with it. Oba: How is the Cartoon Network brand perceived here in Japan? Hashida: It’s recognized as an animation-only channel. I think the foreign and bilingual content is another associated image. Also, I think the “mischievous” and “energetic” image is strong, too. I think the slogan we started using this year, “animation around the world is here for you,” has been well interpreted. Oba: Is there anything you have to pay attention to with regards programming in order to maintain such a brand image? Suetsugu: I think the brand’s image is that of an international animation channel. We actually air a great number of international programs and also ones that younger children can enjoy. We don’t offer any programs that might scare or upset them. Oba: Who are your main competitors? Hashida: Other animation channels such as Kids Station, Animax, Disney Channel and Nickelodeon. Disney launched a new animation channel last summer called “Toon Disney.” Oba: Cartoon Network is in direct competition with Disney Channel and Nickelodeon in many markets around the world. How do you distinguish your channel from those others in the context of the Japanese market? Suetsugu: Cartoon Network Japan offers far more third party content. Nickelodeon’s content is something like 90% Nickelodeon-produced. And, about 80% of Disney’s programming is Disney material. But, since they do have a very well-known character in Mickey Mouse, I think it would be difficult for them to use outside content. Cartoon Network Japan’s content is only about 30 or 40% Cartoon Network and Warner material. I think because we are aiming to show content from around the world, our programming selection doesn’t show any partiality to a certain brand, while Disney and Nickelodeon air mostly their own material. Oba: How is Turner Broadcasting connected with the management of Cartoon Network Japan? Hashida: The board of directors is made up of staff from Turner and Itochu Corporation. Most of the decisions regarding management are made here. Decisions regarding programming are left to Japan Entertainment Network. Basically, Turner is not involved with anything outside of protecting the Cartoon Network brand’s image. They don’t tell us to devote a certain percentage of our airtime to Cartoon Network material or anything like that. The heads of Japan Entertainment Network work in close contact with Cartoon Network Asia/Pacific Headquarters in Hong Kong. Oba: Is Japan an important market for Cartoon Network? Hashida: It’s extremely important. By Asian standards, and even global standards, our market commands a large share of earned revenue. It’s very much an important market, so much so that headquarters in Hong Kong have

288 designated the development of the underlying potential in the Japanese market as one of the corporation’s priorities. Oba: Is it important for Cartoon Network Japan to be part of the Cartoon Network group? Hashida: That’s an essential factor. We are under the umbrella of Cartoon Network, an internationally expanding brand. And from the point of view of programming, if we were not a member of this group, we would not have access to the programs, which make up the basis of our programming schedule. Suetsugu: If we were not part of Cartoon Network, it would be difficult to know what to air. We would lose our identity and our ability to put together a broadcasting schedule. We don’t have any restrictions regarding programming, but we have to maintain an identity. Hashida: We have strong horizontal links with the U.S., Hong Kong, and Indian Cartoon Networks at the management, programming, and production levels. For example, if we have an interest in a program India has produced, they will send it to us. There’s a strong sense of sharing products among members of the same network. Cartoon Networks in several countries have bought “Pinky Dinky Doo,” by the Sesame Workshop of Sesame Street fame, as third party content. Suetsugu: We sometimes broadcast by chance the same content that you find on Cartoon Networks in other countries. Cartoon Network Japan used to air a program called “Little Robots,” which was once part of an educational program segment called “Tickle U” on Cartoon Network U.S. Since all Cartoon Network channels have a similar identity, we all end up offering the same sort of programs. Oba: Do Cartoon Networks ever collaborate in producing content? Hashida: I’m not exactly sure of that. Oba: What is the most important point for consideration when choosing content to air? Suetsugu: Whether or not our target audience of children under 12 and their parents can relax and enjoy the program. We choose funny, enjoyable shows that may also be good for you. If we veer from these guidelines, it’s possible to include almost anything. But, with all the internationally-produced material we look at, we choose programs based on content rather than country of origin. Oba: For viewers of animation, are the characters the most important point? Or, is it the storyline that is more important? Suetsugu: It’s both. But, for younger viewers especially, strong characters are more important. Little kids are attracted more by the look of the program rather than the plot.

289 APPENDIX J INTERVIEW WITH CARTOON NETWORK TAIWAN

July 25, 2006

Oba: Is all of your programming animations, or are you including any other types of children programs? Chou: Generally, 99% is animations. Oba: What about the remaining 1%? Chou: We have a movie franchise (time block). Sometimes we have action movies. They are not animations. Oba: Are the action films for kids? Chou: Yes. Oba: So, all of your programming is for kids, isn’t it? Chou: Not really. We don’t define Cartoon Network as a kid channel. We hope adults also watch Cartoon Network. But, to be honest, the main target is kids. Oba: How can you define the main target of your channel? Chou: This is last month’s our audience proportion. 25% is boys 4 to 9, and 16% is girls 4 to 9. Oba: You are attracting younger viewers compared to other channels. Chou: Yoyo and Disney are kids channels. They have light shows and in-house programs. They have more mother viewers who ask their kids to watch. But, Cartoon Network is simply an animation channel. There are not many females who spend time to watch us. Oba: Even if you define yourself as an animation channel, not a kid channel, you have larger proportion of kid viewers under 9, compared to Disney or Yoyo. Why? Chou: It is because now we have some Japanese shows popular for that target like “Mirumo De Pon.” During this year, they are very popular, so we have more kids who watch us. Oba: What percentage of your programming is from outside Taiwan? Chou: We have only one show made in Taiwan. The rest is all from abroad. Oba: What type of programming is that? Chou: It’s animation for preschoolers. Oba: Except for the programming, do all programs come from foreign countries? Chou: Right. Oba: What is generally the most popular country as a producer of animation in Taiwan? Chou: I think there are three markets: Japan, America, and the rest countries. American animations are mainly from Disney Studio. Japanese animations are like Miyazaki and other famous Japanese animations. And, for the rest of the world, they may attend animation festivals and get awards. There are some local movie distributors for them. Oba: What are the main supply sources you are importing from? Chou: We have original Cartoon Network shows. We call them CNOs (Cartoon Network Originals). They’re all Americans. We also have shows from Warner Brothers like “Superman” and “Batman.” We also have some older titles from Hanna-Barbera. They have a lot of titles like “Popeye” and “The Yogi Bear Show.” Actually, we have a kind of relationship with CNO,

290 Warner Brothers, and Hanna-Barbera. We invest more on CNO, because we gain more than just programming. They are our properties on a worldwide level, which have been created specifically for Cartoon Network, so we exploit licensing, merchandising, and mobile etc with them. Warner Brothers and Hanna-Barbera should be left out of this group, as we only acquire rights to broadcast on our channels. It is more like a straight program acquisition agreement. And, besides that, we have most of the rest titles from Japan. Oba: Are they coming from Cartoon Network Japan or other productions in Japan? Chou: We buy Japanese animations directly from Japanese productions or through local vendors. Oba: What is the percentage of your programming coming from Cartoon Network U.S., the library of Warner Brothers, or from others, respectively? Chou: In the weekday of 2005, 30% was from CNO, 9% was from Warner’s library, and 34% was from Hanna-Barbera. Generally, Hanna-Barbera’s shows are run in the midnight. And, the remaining 27% of programming is from Japan and Western countries. For the past six months, we actually have added more Japanese animations. Taiwanese like to see Japanese animations very much. For the whole month of June, shows in the top 20 on all local animation channels were almost all Japanese. You can see only “Mulan” is Disney Pictures Studio, and “Mr. Bean” is a live action show of Disney. Yoyo is currently number one kid channel in Taiwan. You can see almost all of their top shows are Japanese. For the top 20 on Cartoon Network, only three titles were from Warner Brothers Studios, and the rest were all Japanese. Oba: Are you offering Japanese animations more often than Disney Channel or Yoyo do? Chou: I think Yoyo and Cartoon Network may show the same proportion of Japanese animations. Disney is special, because their recent policy is to show more Western or Disney’s library shows. They don’t have much Japanese animation. Disney showed a lot of Japanese animations two years ago, but in the recent two years, I think their policy has changed. Because there is Disney Land in Hong Kong, their policy is to show more Disney animation to attract kids to go to Hong Kong. Oba: This channel, Yoyo, is your rival. Do they offer the same titles as yours? Chou: Programs like “Doraemon” or “Detective Conan” have many seasons. Maybe, they have more than 10 seasons. So, licensers maybe sometimes give two seasons to this broadcaster and the rest to another broadcaster. But, for most shows, they have only one, two, or three seasons. So, generally licensers select only one broadcaster. Oba: It depends on the number of episodes, doesn’t it? Chou: Right. Doraemon used to be maybe the top one in Taiwan. Kids and adults like to watch that. Oba: Do even adults like Doraemon? Chou: Yes. Not many adult viewers actually are very old yet. They liked Doraemon when they were kids and still watch it. Oba: Do you have anything like a list of programming from which you can choose content? How do you choose content from a huge programming list of Cartoon Network and Warner Brothers Studios?

291 Chou: They give our Hong Kong headquarters a list, and we choose which one may be suitable to our viewers. Hong Kong headquarters may find some titles only suitable to India but not suitable to Taiwan. Then, they will pick them up only for India. What they give us is a complete list of what they have. We have a lot to choose. We don’t have to take all of them. Oba: Isn’t it difficult to choose right content for Taiwanese viewers from a large number of titles? Chou: We can choose from all of the Warner Brothers’ animations. But, they sometimes have some deals with movie channels. We may wait for a few years to get a movie title. But, for animation series, we can always get them very soon. If a new episode or a new season is shown in the U.S., we can take it maybe six months later. Oba: Can you get those programs from Cartoon Network U.S. or Warner Brothers Studios for free? Chou: We have to pay. Oba: Which one is more expensive, to purchase from your affiliates like Cartoon Networks U.S. and Warner Brothers Studios or from the third party? Chou: Actually, we invest more in CNO. We develop license and merchandise business for CNO. But, as you know, Japanese animations now are very popular, and their license price is amazing in Taiwan. It’s very expensive. Many Taiwanese vendors are very successful to do Japanese animations. They get all rights and sometimes want to sell us a package. Do you know “Naruto”? If we want to buy Naruto, the vendor may ask us to buy other three titles put in a package. We’ve got to pay a lot. Vendors can deal with all rights. We, a broadcaster, can only buy TV rights. Generally, Taiwanese vendors get the price finally, and we cannot deal directly with Japanese production companies, so making the price higher and higher every year. Oba: So, in a nutshell, what’s your priority when choosing content from a number of titles? Chou: When we buy shows from the third party, we’ve got to take the cost into consideration and also license periods and runs we can use. Generally for Japanese animations, we may use six runs in two years. That’s a license period and the number of runs. Vendors sometimes give us only four runs in two years. The cost is very high. If we can only show four times in two years, we think it’s not worthy of spending a lot of money. For program content, we think if this show is for our target or not. Our target is between 4 and 14. If the show is for teenagers, like Naruto, kids will watch Naruto, but more audiences who watch Naruto are teenagers or older men than 14. So, we have to think if Naruto is suitable for our channel. For boys, I would take comedy, adventure, and action. Girls may like a kind of magic animations like a Japanese show, “Magical Doremi.” Oba: Do you also have animations from countries other than the U.S. and Japan? Chou: We have many preschooler shows from Western countries, Europe or Canada. Oba: How are those shows perceived by kids? Chou: I emphasized preschoolers, because they don’t have obvious taste for Japanese or not. Preschoolers’ mothers watch the show with them. Mothers think Western preschooler shows are also very funny because of the image.

292 Actually, Japanese preschooler programs have not come to the Taiwanese market. Most of preschooler animations are from the West. Oba: I heard in Japan that parents like their kids to watch U.S. animation films in English for the educational purpose. Is this also the case in Taiwan? Chou: I think it’s the same. Oba: You are offering a large number of foreign-produced animation films. Are they all translated into Mandarin Chinese? Chou: Yes, we translate all shows to Mandarin Chinese. Oba: Are you using dubbing or subtitles? Chou: All kid channels in Taiwan have subtitles. Oba: How about sounds? Is the sound English or Japanese original version, or are you also using dubbing? Chou: We dub all the show into Mandarin. But, there is some special programming block. They will show in original language. Disney has some franchise for movies. On Friday midnight, they will show original English version. Oba: Do you have two sound tracks from which viewers can choose either Mandarin or English? Chou: We don’t do that. But, some broadcasters do that. Actually, we think we are an animation channel, not a kid channel. We are not interested in English-learning programming. Oba: You are using both subtitles and dubbing. Why do you have to use both? If animated characters speak Chinese, I don’t think you need subtitles. Chou: Like you say, actually they are speaking Mandarin. But, Taiwan is very special, as audience is very used to subtitles. If we don’t have subtitles, they feel they lose something. Oba: You might be able to use only subtitles. Given an animation film coming from Japan, of course, characters speak Japanese originally. But, if you add subtitles, you don’t need to use dubbing. Chou: I think, for animation programs, younger audience prefers dubbing. But, if the channel is a movie channel, like a Western movie channel, they will not dub. HBO, a movie channel, just uses subtitles, and there is no dubbing. But, for animations, they will dub. Oba: Cartoon Network Japan hardly uses subtitles. Almost all programs are dubbed into Japanese. But, you are using both dubbing and subtitles, aren’t you? Chou: Yes. Actually, the cost is very high. I don’t know the price in Japan, but I think the dubbing in Japan is very expensive. Oba: Do you think animation programming in general can cross national boundaries easily compared to other types of programming like music or sports programming? Chou: I think so. It is not difficult to understand animations. If you don’t know the language, you don’t enjoy music at all. But, you can just watch and understand animations. Popular animations like Disney or some Japanese animations generally have a lot of commercial promotions. Other programming like sports doesn’t have much promotion. So, I think animations can cross internationally easier. Oba: Why are animations promoted so heavily? Chou: I am just taking the case in Taiwan, because it’s an important business in Taiwan. Because Japanese animation is important and big business in Taiwan,

293 Taiwanese vendors do as much promotion as they can. And, we also have a lot of animation fans in Taiwan. Oba: Do you think Taiwanese viewers’ preference has some influence on your programming decision? Chou: Definitely. Oba: Don’t you think preference for animations is bound by culture in each market? Chou: Yes. I think, in most American and Western animations, characters speak quickly and a lot. But, in Asia, kids don’t speak as much and quickly as American kids. Oba: I am not sure whether people speak fast or slowly is related to cultural influence on animation. What is the relationship between them? Besides, you are using dubbing. Viewers do not know how characters originally spoke. Chou: You’ve got to keep the original dialogue and conversation. There are also American jokes or American festivals like Halloween. Kids don’t even know what Halloween or Thanksgiving Day is. With that kind of things, they’ve got confusion. Oba: Do Taiwanese kids easily understand Japanese cultures featured in animation films? Chou: They understand them very much. I think Taiwanese kids are very familiar with Japanese cultures. So, it’s not a problem for them to understand Japanese shows. For example, you have a lot of hot springs in Japan. Taiwanese kids are familiar with them, but maybe American kids don’t go to hot springs a lot. And, Taiwanese kids also like characters, which look cute and lovely. American-style characters look very strange. Generally, American animations can’t come to the Taiwanese market, because their characters look very strange. And, Taiwanese kids like interesting stories. I think a Japanese animation is very successful in a story. Taiwanese kids also like a slower story. I mean tempo. As I told you, American animation characters speak a lot and quickly. That’s why American animations are difficult to come to the Taiwanese market. Oba: Which one, Japanese animation characters or stories, do you think Taiwanese kids typically like or both? Chou: I think both. Oba: What do you think of animations produced by Studio Ghibli of Japan? Do you think their shows are too Japan-oriented or appealing to other countries? Chou: I think they are very Japanese style. But, the shows are not much regarding culture. You just understand the story and don’t need to really take culture. I think it’s not difficult for foreign people to understand. Oba: You have some animations produced by Cartoon Network U.S. and offered globally. For example, “The Powerpuff Girls” is perhaps watched all over the world. Do you think those animations produced by Cartoon Network U.S. are targeted at global audiences or are initially made exclusively for the U.S. audience and then exported to other markets? Chou: Cartoon Network Asia/Pacific also invests in the production of Cartoon Network’s original shows. Actually, we spend more. We can give some suggestion to them. We do provide international inputs from Asia in the Cartoon Network shows, as they are being developed. But, the final decision is depending on American Cartoon Network. They are still the dominant

294 decision-maker in the productions at our Cartoon Network studios, as they are the key investor in each series. I’d say sometimes they still have a kind of American perspectives. They are still using American thinking to do the show. We think it’s just an American style, but Cartoon Network U.S. may think it’s global. Because Cartoon Network is developing globally, the global image is important to Cartoon Network America. I think they are getting more consideration for the global image. The last time the president of Turner Broadcasting came to Taipei, we asked the same question. He said, “Of course, it’s global consideration to develop animations.” Actually, many people complain that many of Cartoon Network’s original shows are very American style. Characters look ugly and do not work in Taiwan. Oba: Do you think it’s possible to develop some animations, which can be popular all over the world? Chou: I think it’s possible. Powerpuff Girls is the one. Cartoon Network also co-produces animations with French and Japanese companies. This is another Powerpuff Girls, “Powerpuff Girls Z.” It’s also co-production between Cartoon Network, Toei, Aniplex, and TV Tokyo. Oba: They try to modify characters more Japanese style. Chou: Yes. It started to run this month. Actually, I think characters are really better than originals for Asian people and kids. Oba: What I found interesting is that the development of them has nothing to do with Cartoon Network Japan. Why? Chou: It’s supposed to be a deal between Japanese animation studios and Cartoon Network America. Oba: Do you have any regulations or restrictions on content? Chou: Of course, we are not allowed to show drug-use, sexual, or violent content even in the midnight in Taiwan. For some shows, dialogues are very strong. We may not put them in the daytime but in the midnight. Oba: Are they your self-regulations or regulations by the Taiwanese government? Chou: The government has an agency to check us regularly. Sexual content and too violent content including a bloody image are not allowed. Oba: Japanese animations are sometimes criticized as being too violent, though. Chou: Local broadcasters including us will not show that kind of show if it’s too violent. Do you think Naruto is too violent? By our definition, it’s not too violent, and it’s still popular in Taiwan. Oba: Given a program, European might think it’s violent, but Asians might not, and vice versa. Chou: Yes, and I think it is very subjective. This show, “Bobobo-bo Bo-bobo,” includes very strong dialogues, but Cartoon Network America still shows this type. They think the dialogue is interesting and funny. We think it cannot be shown in Taiwan. Oba: What about the regulation in terms of the amount of imported programs? Chou: We don’t have legal regulations, but the government encourages us to produce more in-house programming. We don’t have the formal regulation for the percentage of imported programs. Generally, the government just cares about if our advertising is too much. They have regulations for advertising. We sometimes get concerns later from the government like, “Your advertising is too much.” But, for the past two years, we have never gotten the concern from the government about content or programs.

295 Oba: Why, as you mentioned, is the government concerned about the amount of imported programs? Do you have a sufficient amount of animations made in Taiwan? Chou: Yes, but a very few. Oba: It could be difficult to offer a large number of Taiwanese animations instead of imported ones, because there is a very limited amount of Taiwanese animations available. Chou: I think the government just encourages us to work with local producers. For Cartoon Network, Disney, and Yoyo, the government checks every seven years if those channels are qualified. Every seven years we’ve got to apply for new license. So far, they think Cartoon Network, Disney, and Yoyo as general channels kids have no problem to watch. Generally, the government is not concerned about our programming content, because they think we are qualified. Oba: You have two different types of revenue sources. One is advertisers, and another is cable systems. Which portion is bigger for you? Chou: Advertising. Oba: What are main advertisers for your channel? Chou: The number one is female products like shampoos and lotions. The second is kids products like toys or stationary. Oba: Do they have any requests for your programming? Chou: To be honest, the sales department gets comments from advertisers. Advertisers in Taiwan don’t really give much advice to broadcasters. They are concerned about audience ratings. For female products, even if kids ratings are pretty low, they don’t care. They only care female ratings. For female 10 to 39, our ratings are very low. Female products advertisers care about this. Oba: How about cable systems? Do they have any specific requests for your programming? Chou: Generally, they don’t. In Taiwan, channel distribution is a package, and we have an agency. They may put us with other channels like drama channels or variety channels. System companies generally don’t give us any advice. Oba: How is Cartoon Network perceived as a brand among Taiwanese? What kind of images do they have? Chou: Funny, active, and creative. Because we try to present our shows in a more creative way, some kids think we are more active or funnier. I think we are improving. We didn’t have local Taiwanese people working for the programming department before I came here. During that period, because our headquarters is in Hong Kong, all dubbing and promotion were made by Hongkongnese. Because they speak Cantonese, it was difficult to depend on Mandarin. During that time, some audience complained about the promotion, and the dialogue was very strange. We are improving but still behind Disney, because Disney is very good at branding in Taiwan. Oba: What do you care about in terms of programming in order to keep those images? Chou: I think we can do that with on-air promos. Oba: What is the relationship between the promos and brand images? Chou: In Taiwan market, almost everybody actually says our promo is very nice, because we take more cost and time to do promotion, making the promo very

296 nice. Local broadcasters’ promos are just done in a very short time. Our promo’s quality is actually very different, compared to other channels. Oba: Is it common for Taiwanese viewers to perceive Cartoon Network as an international or global channel, or do they think it’s just a local channel? Chou: I think kids may not think Cartoon Network is an international channel, but adults know it’s a global channel. Oba: Do you think you have to offer more foreign animation films in order to keep the global image? Chou: We are a commercial channel, so we still have to serve our main target. For the main target, we cannot provide too much animation from West or the U.S. But, we do want to put more international images into preschooler shows, because we have a preschooler franchise. I mean a time block. We have “Tiny TV,” “Miguzi,” and “Cartoon Network Theater.” They are not program titles. Miguzi is between 5:30 to 7:30 pm on Monday to Friday. We put Tiny TV on Monday to Friday, 7:30 to 11:30 am. During this time slot, we put more global image actually for kids’ parents. We think preschooler kids’ parents like to have more global image. But, in the afternoon and evening, we put more Japanese animations, because school kids only want to watch Japanese animations. Oba: Is it difficult to keep the global image, if you offer only Japanese programs? Chou: Disney tries to have global image. Disney is trying to do not just Japanese style. But, we are still targeting 4 to 14 audiences. We may not be able to do that like Disney in the near future. Oba: You are competing with Disney Channel in this market. Don’t you have Nickelodeon in Taiwan? Chou: Nickelodeon is already in Taiwan, but its platform is digital cable by set-top box. Disney and Cartoon Network’s platform is basic cable. In Taiwan, almost every household has basic cable, but only a very few audiences pay another cost to see digital cable. It’s not popular in Taiwan, so I think only a few people know Nickelodeon. Oba: How do you distinguish your channel from Disney in this market in terms of programming? Chou: Disney is very good for audience between 4 and 9 and adults. We try to be more successful for kids between 10 and 14. Actually, we are very successful in 10 to 14. We try to put shows for older kids. Disney shows their movies and also has Miyazaki’s library. There are a lot of adults who like to watch them. A lot of their new shows are incredible and very strong animations from Pixer. They show those shows, making their ratings jump. Oba: You have a large number of Warner Brothers’ shows, though. Chou: I think Warner Brothers’ library is definitely the number one in the world, but unfortunately they cannot support us much. They have their own business, and we have our own business. I asked for the top of management, but every time they say it’s not possible. Oba: Do you mean Disney Channel is more close to Disney Studio than you to Warner Brothers? Chou: Yes. Actually, Disney group has Disney channel. Oba: Are you a wholly owned subsidiary of Turner Broadcasting, or a joint venture? Chou: We are 100% held by Turner Broadcasting.

297 Oba: How is Turner Broadcasting connected with the management of Cartoon Network in Taiwan? What’s their relationship with you? Chou: Turner Broadcasting holds Cartoon Network Taiwan. But, I think Cartoon Network Taiwan is just held by Hong Kong headquarters of Cartoon Network Asia/Pacific. We don’t have lots of direct relationship with Turner. Oba: You don’t know if Turner has a number of requests for you in terms of programming, do you? Chou: They hope us to show more CNOs. I’d say they will pay more attention to if we show CNOs more. Oba: Why? Chou: It’s because we are Cartoon Network and get shows, and because we also have Cartoon Network original shows’ merchandise business. So, they hope us to show more CNOs to support merchandise business. Oba: Why do you have Cartoon Network Taiwan separately from Cartoon Network Asia headquartered in Hong Kong? In general, I think Taiwanese and Hong Kong viewers might have very similar preferences. Cartoon Network may not necessarily have to have two different feeds. Chou: In the whole Asia Pacific, we have three branches: India, Australia, and Taiwan. In these three countries, we have local offices. For Thailand, Philippines, Korea, Pakistan, and Southeast Asia, they are all operated by Hong Kong headquarters. I think it is because of advertisers. Another one is that we use different languages for Taiwan and Indian feeds. Actually, in Hong Kong, Cartoon Network is English-speaking channel. What they do is not very suitable to local markets. Oba: So, did they have to develop a Mandarin-speaking channel for the Taiwanese market? Chou: Yes. Oba: Do Cartoon Network Taiwan and Hong Kong share the same programming? Chou: We share the same Cartoon Network library, Warner Brothers library, and Hanna-Barbera library. But, for animations from third party, we sometimes may buy only for Taiwan. Or, we can buy some titles together for Taiwan and Hong Kong. It depends. Oba: Do you have much freedom in order to decide your own programming independent from Honk Kong headquarters? Chou: Local offices cannot decide it. If we want to buy a program, we have to be approved by Hong Kong headquarters. We cannot just decide what to buy, because it has to be finalized by Hong Kong headquarters. But, they generally use our opinions. We can do our advices or any suggestions to them. Oba: What will happen if you think, “This program would be successful in the Taiwanese market,” but Hong Kong headquarters says, “No,” for some reasons? Chou: Then, we will not buy that. Oba: So, you have to follow the order. Chou: Unfortunately. But, there are some animation fans of Warner Brothers’ library. If we think it cannot work for Taiwan, we don’t have to use it. That’s why there are some Warner Brothers’ animations shown in India or Philippines but not in Taiwan. We can also do our suggestions to see if we

298 want it or not. But, for CNOs, we have to show them anyway, even if it’s not suitable. Oba: In general, do you think Taiwan is an important market for Cartoon Network? Chou: I think so, because the revenue from Taiwan now is the number three for Asia Pacific. So, it is an important market to Cartoon Network. Oba: Do you think it is also important for your channel to be part of Cartoon Network? How important is it to be part of a global network? Chou: I think Taiwan is actually a very tough market, because there are so many channels to show animations. I think headquarters knows that. How they operate Cartoon Network Taiwan is a good experience to them. For rating performance, we have been improving from the last October. Last year, we were actually very low. But, for this year, we are improving a lot. How improved is a very good experience to headquarters. Oba: A Taiwanese leading animation channel, Yoyo, has nothing to do with global networks, but you are part of a global network. How can you take advantage of this position? Chou: We hope the channel to be more localized. Actually, we don’t really emphasize or look for very internationalized channel. To our main target, if you pay attention to a very international image, I think it doesn’t work very much. That’s why I say I can do that only during the preschooler time block, but for the rest of time block, I cannot do that. We try to localize more with dubbing and any on-air and off-air promotion. Oba: You don’t necessarily have to be part of a global network if you try to localize your programming. Chou: Actually, I think it is not very important to the operation of the channel, because I want to localize the channel more. We want to show more animations local audiences like. That’s what I call localization. If local people like to watch Japanese, then we will show more Japanese. Oba: So, do you think you should be freer from the network? Chou: Yes. Of course, the top management also always hopes we can show more Western animations like Warner Brothers. But, I think now they know very clearly that cannot work in Taiwan. Oba: You don’t rely on Cartoon Network so much. Why aren’t you independent from the network? Chou: I can take Disney for example again. Disney used to be in the same situation before. But, now Disney Taiwan is very independent. They have their own budgets for acquisition. They have their production team. For Cartoon Network Taiwan, our budget is all controlled by headquarters. But, Cartoon Network India is more independent, because the Indian market is very huge. They have more people and costs in India, so they allow the India office to get more freedom to do what they want to do. But, in Taiwan, they still want to control directly. Oba: After all, what is the most important thing when you decide programming in this market? Chou: It’s very simple. I think if this program gets ratings or not, and if it is going to be acceptable or popular to audiences. Oba: What types of programming usually get higher ratings?

299 Chou: Comedy, action adventure, magic, or romance. That kind of content usually gets better ratings. Oba: Do you think whether or not those certain types of programs get higher ratings has nothing to do with where those programs came from originally? Chou: I’d say that. I think Japanese animation became popular not because it is from Japan but because of its content. Japanese content is generally more popular to Taiwanese. Oba: Do Taiwanese always associate Japanese animations with high quality? Chou: I think so.

300 APPENDIX K INTERVIEW WITH CARTOON NETWORK ASIA/PACIFIC

August 25, 2006

Oba: In Asia, you have country specific feeds for Japan, Taiwan, and India… Schofield: Yes, and the Philippines and Australia and New Zealand. Oba: Where are those feeds programmed and scheduled? Schofield: They are programmed and scheduled in the individual countries, in Japan, in Taiwan, in Australia and New Zealand, and in India. Then, the Philippines feed is programmed from here. The Southeast Asia feed that covers many countries is programmed here in Hong Kong. And, we also have “Boomerang Channel,” which is classic cartoons, programmed here in Hong Kong. But, all other feeds apart from the Southeast Asia and Philippines feed is programmed in those specific countries themselves, but they broadcast from here in Hong Kong. Oba: Do you provide the totally same programming on the same schedule? Schofield: No, Taiwan is programmed by Gary specifically for Taiwan, and it’s his decision of how he wants to make the schedule. It’s very different from many other schedules that we create for all the feeds. Same with Japan, same with Australia and New Zealand and India, the schedules are tailored for the competitors in that market and for the viewing habits in that market. Oba: What about Hong Kong and Singapore? Do they have the same programming? Schofield: That is the same. The one feed that goes into most of Asia is what we call the Southeast Asia feed. It’s the one programming grid and gets seen by Hong Kong, Singapore, Malaysia, Thailand, Vietnam, Cambodia, Macao, Fiji…a lot of different countries. All see the same one program schedule. Oba: What should I call the programming feed? Schofield: Cartoon Network Southeast Asia. We call it just Cartoon Network to viewers, but internally we call it the Southeast Asia feed that goes to most countries in Southeast Asia. Oba: What’s the reason for providing only one feed for those various countries? Schofield: The reason we divided off into separate channels is for ad sales revenue. If we want to sell advertising and show it only in one country like Taiwan or Philippines, we would give them their own dedicated feed. It is not until we recognize a country like Singapore, Hong Kong, or Malaysia as very important for ad sales that we would give them their own separate feeds. The Southeast Asia feed by having the one channel means that we can make distribution revenues, which means cable operators pay us money to provide them with the channel. Our main revenue stream from Southeast Asia is distribution, not ad sales. So, it costs us less to just program one channel and send it to those many countries. It becomes bit of profit for us if we just run one feed and make the distribution revenues. Oba: What’s your definition of localization? Schofield: It’s about making audiences realize that the channel is made for them. We might name programming blocks on the channel something that would relate to their local language or their local kind of slang words so that they realize the channel is being programmed for them. And, localizing a feed is in terms

301 of branding it so that the audience realizes it’s a local feed. The other way we would localize it is just to make sure we are looking at their habits and their viewing patterns that are about country and the competitors within that country. Oba: You have Cartoon Network Southeast Asia in English only. Schofield: In Thailand, we have Thai dubbing, so Thailand receives it in their local language, and Korea receives it with subtitles. Everyone else receives it in English. Oba: As for content, do you have any animated films produced in Hong Kong or Singapore? Schofield: No, we don’t actually. No one has tried to specifically sell us animated content that was made in Singapore or Hong Kong as yet. With our channel and our brand, nothing has taken our interest to acquire. There is more available in Singapore, because of their media authority promoting animation to be made, but we haven’t been shown anything that we felt strong about acquiring. Oba: In my opinion, localization seems easier for Cartoon Network Japan, because Japan has a number of animation titles made in Japan. Schofield: Japan does, but Cartoon Network Japan specifically stays away from buying Japanese titles, because they want to offer the audience something different from what they see everyday, which is international cartoons. Oba: So, most of animated films offered by Cartoon Network Southeast Asia were made in other countries not covered by the feed. Schofield: No, the programs that we show in Southeast Asia are usually not made in Asia. They are made in Europe or Canada or the United States for the most part. Oba: What about Japanese animation? Schofield: In some of the Asian markets that are covered by our Southeast Asia feed, Japanese animation is very popular. Again, it would be a large cost to our business to buy Japanese animation that covers so many countries by that one feed. If we would show a license just to many countries, we will be looking at a very expensive license fee. So, we don’t even look at Japanese animation for Southeast Asia feed at all. Oba: What’s the main supply source of programming for Cartoon Network Southeast Asia? Schofield: Main source is ourselves. The channel is largely made-up of Cartoon Network original programming. Second to that would be Warner Brothers cartoons, and third to that is the acquisitions. Oba: Can you tell me the ratio? Schofield: It’s probably about 60% Cartoon Network originals, 30% Warner Brothers, and 10% acquisitions. Sorry, 30% I guess Warner Brothers and Hanna-Barbera, but we don’t put very much Hanna-Barbera on Cartoon Network anymore, because we have Boomerang, which is a classic cartoon channel for “Baby Looney Tunes,” “Flintstones,” and “Jetsons.” So, really the few Hanna-Barbera titles you see in Southeast Asia would be “Tom and Jerry.” Oba: Cartoon Network is a property of Turner Broadcasting, and Turner Broadcasting is owned by Time Warner. So, what’s your relationship with Warner Brothers in terms of programming?

302 Schofield: Collaboration is not exactly the word I am looking for. There is a relationship that we still pay them for their programming, which doesn’t mean we get programming for free. They still have budgets and profit margins to make. They say that they charge us less than market rates. There is a favored rate in there. And, for some of the cartoons, I would agree and, for others, I wouldn’t agree. So, it’s not like they will give us first windows. They still have their business to talk to movie networks first and to sell to terrestrials before us. In terms of movies, definitely that’s the case we will wait a while to get animated movies. For animated series, they will work alongside us for “Teen Titans” or “Xiaolin Showdown,” a Warner Brothers animated series. It may sell into terrestrial at the same time as us, but they won’t sell it another cable channel before they will let us premier usually. That’s about the strength of the relationship. It’s not really output deal, but it’s a large deal we do with them, because we use so much of their content. As for movies, it depends on the availability in that market. If they have already sold it to HBO, HBO obviously can pay more than what we can pay. So, they may get a “Scooby-Doo” movie before we would get it. Then, we would be allowed to get it. So, we don’t have first pick on everything, but there is an understanding that the cartoons that come out of Warner Brothers animation are offered to us for acquisition if they are available. Oba: What are your criteria when you choose content for Cartoon Network Southeast Asia? Schofield: At the moment, we tend to get cartoons that have a similar appeal that our CNOs and Warner Brothers cartons have, because that is the largest amount of the channel. We want the broadest audience possible, so we don’t buy preschool shows, whereas with the other feeds, we will buy preschool shows for specific smaller demographic. With the Southeast Asia feed, we want to get 4 to 14 as our core demographic. We usually look for something that’s got comedy or is an action comedy. Something that has a similar feel to our brand and our brand statement is that Cartoon network is fun, funny, and fearless. We will be a bit edgy or try new things sometimes. We don’t have to be very safe and very politically aware of every single thing we choose that some other big nullified company had to think about. But, we look for something that’s fun or funny or has a bit of adventure. Oba: Is there any difficulty to choose right content for viewers living in various countries in Asia, because I guess perhaps Singaporeans have different preference for animation to their Hong Kong counterparts. Schofield: We think about the channel in terms of the look, the feel, and the experience of coming to Cartoon Network and the fact that it’s in English. We don’t think about as much what Malaysia is going to think about this, what Hong Kong is going to think, and what Singapore is going to think. We only measure ratings in Singapore, and that is used for ad sales to sort where we position ourselves. But, we are not programming for just Singapore. We understand that we are representing a brand across all of Asia. We would never do this for any other feed, because it’s dedicated. We would think about Taiwan and the audience. We would think about India and the audience. But, for Southeast Asia, we think about the channel, the brand, and the experience. How does this programming complement the other programming on the network? Where would we schedule it? And, if it fits the criteria, and

303 then we will acquire it, that said we only acquire the show for all of Asia. If it’s ever going to go on Southeast Asia, it means it’s required for all of Asia. When we acquire for Taiwan, we might acquire just for Taiwan, because they have a dedicated feed. But, we don’t specifically try and buy shows just for Southeast Asia. Shows that Southeast Asia has on there are acquired or bought in a pre-buy or very early stage that we can get the whole territory. Oba: There are some animations produced by the U.S. Cartoon Network and offered on a global basis, like “The Powerpuff Girls.” Do you think those animations are produced intentionally to target global audience or do you think it’s initially produced for the U.S. audience and then just simply exported to other countries? Schofield: I think in the past it was definitely more so produced for U.S. audiences and just exported. And, we were fortunate that some of those shows were worth well in Asia, like the Powerpuff Girls. We are now working more and more towards international, which is all of the Cartoon Networks outside of the U.S. having a voice and being involved in the green light process. So, when a series is still in the development stage, we are shown scripts, story boards, and animatics (previsualization). We provide feedback to the U.S. How much wide that feedback is given, we don’t really know. We will often say we don’t want that series, and it will still get made, because the U.S. may feel very strongly that it’s going to work for them. So, when they are putting in the biggest portion of the production budget, often it is that a series gets made, and it will come to the rest of us. But, more and more they are listening to international and understanding that a show ideally has to work around the world. But, we are not going to have the kind of input that says we want to show just like this, because this is what would work in Asia. It has to also work in Europe, in the U.K., in Latin America, and then in the U.S. as well. The U.S. is still the dominant production force in creatively controlling the series. Oba: Do you think it’s possible to develop animation films, which can be accepted and become popular all over the world? Schofield: That’s what we are aiming for now. We’ve just been with the investment of production that we have done in the U.S. We committed $500 million over five years to creating Cartoon Network cartoons just in the U.S. for the whole world. Now, we’ve just set up our production studio in the U.K. as an extension of our U.K. office where cartoons for international regions will be made. The U.S. can then use them as well, but they’ve been made more from an international perspective. Along with that studio being setup in the U.K., they are now giving money to us in Asia for development. So, we are looking to India and Korea. We are looking to these countries where animation is being made, and we want to make it for ourselves. We are working in our market but also try and create something that we can then show in the U.S., the U.K., and other country markets. We make this primarily for us, but we want to have universal themes to work outside of India or Korea. So, that’s a really positive step forward that we are doing for Cartoon Network to be trying to have co-productions and full productions here in Asia. Oba: I know that the U.S. Cartoon Network is developing some programs in collaboration with Japanese productions. For example, they have the

304 Powerpuff Girls Z. What’s the purpose of this? I think it’s a modified version of Powerpuff Girl for Japanese viewers. Schofield: Yes, it was made primarily to work in the Japan market. We are still looking at whether we think of working in all other markets. Do we want to now create an English version? America primarily focused on taking a known property, making a new version that will work in Japan and starting co-production relationships for further. The U.S. is very serious about making more and more co-productions between the U.S. and Japan. Japan’s generation is shrinking. There are not as many young people in Japan as they used to be. When we are looking to Japan for their cartoons to work in our markets, very often they are getting more violent. So, the U.S. is saying, “Let us come in and make cartoons.” We see that will work in our markets as well. Oba: In my opinion, the Powerpuff Girls Z looks more suitable for Asian viewers than original Powerpuff Girl. Schofield: Yes, we know that. The U.S. was well aware of that. They said this was made for Japan. We told TOEI to make a cartoon that would work in Japan to not compromise to try and make it work in every single country. So, it is a primary Asian cartoon, and the U.S. is still going to decide whether they will take that to the U.S. as a new version of Powerpuff Girls. Oba: In comparison with other types of programming, do you think animation films are able to go across national boundaries more easily because of the characteristic of animation? Schofield: Definitely, yes. We find that in India as one case for sure animation works. We were the first kids channel in India. We have been in India for over 10 years now. And, being Cartoon Network, we always offered animation. Once live action started to show on kids channels in India, we really realized live action does not work as well, because once you dub that, you can see human lips moving in a different sync to the actual dialogue. For kids, they don’t know where the animation is made. Of course, it’s going to relate to them better, depending on the cartoons. Some cartoons work better than others. And, in Taiwan, for instance, Japanese cartoons work better than western cartoons. But, overall I think animation stands up better in Asian countries that speak their local languages. It’s easier to dub. Oba: As you mentioned, in fact, for the top 20 on Cartoon Network Taiwan in June, only three titles were from Warner Brothers studio, and the rest were all Japanese. Do you think Asian viewers in general receive American produced animated content well? Schofield: No, as well as they receive Japanese or Asian content. Japanese is what they prefer first and foremost. Even when they look at Chinese and Korean, they will still be able to tell it’s not Japanese. So, they still have a number one preference for Japanese. The American content we make is largely based on comedy. That’s where a disconnect happens, because comedy is very dialogue-based. If we can get visual comedy like Tom and Jerry, they love it. They will definitely accept it. In India, Tom and Jerry is one of the best rating cartoons. In Philippines, it is our best rating cartoon along with “Pokemon.” So, something that can provide them with action or with visual comedy, even if it’s not from Asia, will work. Something that’s very dialogue-based is harder to make work in the non-English speaking markets.

305 Oba: You talked about dialogue. Are there any concepts in western animations and in U.S. animations specifically, which cannot be understand by Asian viewers, because of cultural difference? Schofield: Yes, there are. Actually, we have one cartoon called “Foster’s Home for Imaginary Friends,” and we are told in India they don’t have the concept of an imaginary friend at all. They joke about how there is such a big population you don’t need an imaginary friend. You have got people all around you. But, they don’t really get that concept that’s come from our studios in America. Another show, “The Grim Adventures of Billy and Mandy,” has two kids being friends with the Grim Reaper. Taiwan will watch it, but they don’t like it as much, because an Asian market is perhaps more superstitious and really has a personal affinity with death and ghosts. They don’t like the concept of kids being friends with the grim reaper. They find that bit scary. So, there is definitely that disconnect. But then, the world of cartoons makes believe as it is that so many of our cartoons are giving you so real imaginative situations that are taking kids out of the ordinary and putting them in really extraordinary unique circumstances, which I don’t think the Japanese do as much. So, the Asian countries that are very used to Japanese stories want to realistically look people and stories they can understand a little better. Oba: Do you think kids are in general more curious about what they don’t know? Schofield: Yes, they are. But, I guess they need to be some kind of realistic hook there that they can grab onto to relate to something Oba: Do you think viewers in Asia share something common in terms of preference for animation program in comparison with American viewers? Schofield: If you are comparing Asia with America in that way, you could clump all the countries together in the same continent and say yes. They all prefer Asian cartoons more than American cartoons on the whole. If you are looking at Korea, Japan, Taiwan, and Hong Kong, I would say that. I think some like Singapore accept American cartoons more. I just feel like they have got more of an English presence in Singapore. They’ve got more American acceptability in Singapore. They are little bit more westernized than somewhere like Taiwan or Korea. We find that our American cartoons will work quite well when we look at the ratings in Singapore. And, when you look at the channels, even Kids Central is showing Warner Brothers cartoons, and it’s not all about Japanese cartoons. They will show plenty of western cartoons and Disney and Nickelodeon. And, we are all putting that injection of western entertainment into Singapore, whereas in Taiwan, you still really need to feel Japanese content. Oba: Do you mean Singapore kids are more westernized or Americanized compared to other Asian kids so that they can accept the U.S. animation more? Schofield: I think so. Oba: Do you have somebody in this regional headquarters familiar with Singapore markets or Singaporean’s preference for animation? Otherwise, I think it might be difficult to grasp what Singapore viewers like. Schofield: We just have an Australian who works for us now. He used to live in Singapore for seven years, working for Disney in Singapore. He is about the closest connect we have to Singapore. I don’t know any of the American

306 cable channels that program specifically for Singapore, because none of us have a dedicated Singapore channel. Nickelodeon just puts their Asia channel in there, so does Disney, even though there is the Disney broadcast office in Singapore, and Nickelodeon is in Singapore. Maybe, they have a better understanding of Singapore, because they live there, but they are not programming specifically for Singapore. Disney is looking at the same feed going into so many countries. They are hoping that they will rate in the Philippines just as well as they can rate in Singapore. Oba: You said earlier the audience is in general not concerned about in what country animation was originally made. Schofield: Depends what country you are talking about. Taiwan, yes, they do. They wanted to be made in Japan. Oba: I am talking about the viewers for Cartoon Network Southeast Asia. Schofield: I think that they like animation more than live action as a whole, because I think it translates better. If you are talking about taking it into a local language, like India or like Taiwan, I wouldn’t try to put live action dubbed in Taiwan as easily as I put animation. In Southeast Asia, in Singapore specifically, I don’t think they care as much what country of origin the cartoon has come from. If it’s in English, they used to watching all of the cartoons in English. I think it’s more about the characters and identification with them, and whether it’s comedy or action. Some of our best rating shows in Singapore is Teen Titans. It has action and comedy. It’s “Codename: Kids Next Door.” Foster’s Home for Imaginary Friends. Probably they do get that concept enough, and they do like it. So, for Singapore specifically, I don’t think they mind what country it’s made in. Oba: You are also focusing on preschool animations. Schofield: In all other markets, it’s a big focus. In Southeast Asia, again we are not buying many cartoons. We get Baby Looney Tunes and “Firehouse Tales” from Warner Brothers, and we put them into our Tiny TV, which is our preschool time slot. So, we do program for preschoolers. We just don’t spend as much money on buying new programming for Southeast Asia feed as we do in India. In India, it takes up six hours of that day. It’s very important block for us in India, but not as much in Singapore. Oba: Are most of preschooler titles from western countries or from Japan? Schofield: From western countries. We haven’t found that much preschool programming from Japan, to be honest. I haven’t seen Asian or Japanese preschool animation as predominantly as western animation is available. So, kids are still watching the animation that’s made in the U.K., Europe, or the U.S. Oba: Do you think education is a key factor involved in your programming? Schofield: Not in Cartoon Network’s programming. When we offer preschool, we are still wanting to entertain young viewers. We don’t want them to feel like they are just sitting down for an hour to education. We want them to learn through being entertained. So, we don’t look for programs that have numbers and letters and like, “Here is a lesson for you.” It’s more learning social skills. It’s learning self-acceptance. It’s learning courage, laughter, or the different kind of developmental awareness and learning in that respect rather than school kind of academic learning.

307 Oba: Actually, I heard in Japan that parents like their kids to watch U.S. animation films in English because of the educational purpose. Schofield: We have that reaction from Korea, where this Southeast Asia channel is in Korea with subtitles, and the feedback that we hear that parents encourage their kids to watch, because learning English is so important in Korea. But, it’s watching the channel as a whole rather than just a preschool, because they can get English language from the whole channel. Oba: Each country in Asia has its own very unique regulations for content. And also, sometimes they have regulation for the amount of foreign programs. How do you deal with these regulations, which may vary depending on countries? Schofield: We go into those countries as a foreign channel. For Korea as an example, we go onto satellite and some cable homes as a foreign channel. If we launched Cartoon Network Korea as a Korean local channel, there are broadcast quotas that a third of the channel has to be Korean made and produced content. That is when we need a specific channel and program that schedule very differently. But, we don’t have the content quota restrictions on any other country for Southeast Asia. Korea will then be a Korea channel, not Southeast Asia. Once we switch the channels in Korea from Southeast Asia to being the local channel, then we have to fulfill the quotas, but the Southeast Asia channel is considered a foreign broadcast channel that’s put in English, and we don’t have to fulfill any broadcast quotas in any of our countries. Oba: I asked this question, because I think that the standard for, for example, violent content or maybe sexually explicit content differ among countries. Schofield: It probably does, but we don’t even look to put violent or sexually explicit content on our channel, because it’s aimed at 4 to 14 audience. We’re self-regulating in the standards and practices all the time. So, even with Taiwan, when we buy Japanese content, there is nothing saying we couldn’t put violent content on the channel, but we choose carefully to not put violent content on the channel, because we want parents to realize that our kids channel is programmed specifically for kids. Oba: You might have Asian regional advertisers as well as domestic advertisers, which want to reach a specific country market. Which one do you have more on Cartoon Network Southeast Asia? Schofield: We would do an activity in Malaysia especially for KFC Malaysia, or we’ll do something in Singapore for the Singapore Zoo. It’s more country-by-country based than someone paying to advertise across all of Asia. Oba: Do the regional advertisers have any request in terms of programming? Schofield: Not regionally. We get more requests from specific clients that if it’s in Singapore and they are doing something for a Singapore client, we can still program specifically for that client. Everyone will see it, but it will just be maybe running a marathon on the weekend or putting double episodes of Baby Looney Tunes for a month in this schedule, and our client in Singapore may sponsor that. But, it’s still acceptable programming for the rest of the region. Oba: Do you have to prioritize the demand from advertisers?

308 Schofield: Yes. It’s still not a heavily advertised feed. You don’t watch Southeast Asia and see ads all over it. It’s still a pretty clean channel. So, we don’t have that problem too much, but yes. Oba: I think you have multiple sources of revenue. One is from advertising, and another is from multichannel providers like cable services or satellite broadcasters. In the markets like Singapore or Hong Kong, very few cable system operators have very oligopolistic or monopolistic marketing powers. Schofield: Yes. Australia was the same. It’s only three. Somewhere like India has hundreds. Oba: And, in those situations, they might have very strong power. I think they play a role of a kind of bottleneck for you to offer programming, because without them, you cannot offer any programs. Schofield: Right, but I am not a best person to speak on this subject, because I don’t work in distribution and work with the cable operators. But, I haven’t heard of more problems being encountered by countries where we only have a few cable operators than the countries where we have many. I think it’s in a way easier to control the relationships when we only have a few cable operators, and they rely on us to be one of their channels. We service them more because of those viewers to serve. So, there it’s easier to tie-up with them for marketing opportunities or for collaborative ways to push the platform to increase subscription rather than when there is just hundreds or thousands of cable operators. Oba: Do those platforms have any other requests for your programming? Schofield: I don’t know it. Oba: How is the Cartoon Network brand perceived generally in Asia? Schofield: I think it’s perceived well. It’s perceived as a comedy channel that is for cartoon lovers of all ages but primarily as a kids channel with a mix of action as well as comedy. I think the Powerpuff Girls and some other are very well-known titles that are still what people recognize as our channel brand. Oba: Is it common for Asian viewers to associate Cartoon Network with something international or global? Schofield: Yes, I think so. Oba: How does their image about Cartoon Network influence your programming? Schofield: It doesn’t really, because the Southeast Asia channel doesn’t have a lot of acquisitions. The Cartoon Network Channel in Southeast Asia really equals the Cartoon Network brand with a mix of Warner Brothers cartoons in there. So, that really defines our brand, and we don’t get negative feedback that makes us change our programming. We look at the ratings, realize what works, and use that more often in the schedule. Oba: I think you, as the Asia headquarters, are supposed to be a kind of intermediate or middleman between Turner Broadcasting and local affiliates like Taiwan or Japan. Is that correct? Schofield: That’s one aspect of it. We are not really playing intermediately. Yes, we do report back to the U.S. at the end of the day. But, we are pretty self-sufficient headquarters right here. So, Taiwan reports into us, and it’s pretty self-contained. Once the reporting comes up to Hong Kong, it pretty much stays here. We feed information back to, say, Taiwan about when new cartoons are coming out from the U.S. So, that’s the level of the information comes from the U.S.

309 Oba: What’s your response, if there are some conflict or disagreement between the perspective of Turner Broadcasting and the local perspective? Schofield: I wouldn’t say Turner Broadcasting. I would say Turner Entertainment Networks Asia. We do have those circumstances where you do have to trust your local program manager, because they’ve grown up either being Taiwanese or being Indian, and they have a sense of their audience and their local market. And, I have a sense of our brand, our channel, what can be done, what can’t be done, and what’s worked in the past. So, there is usually just a discussion that has compromise that reaches that I’d like to give them a certain amount of autonomy and ownership of their channels. So, in certain circumstances, I will say, “OK, do it. You know how to take the risk. I trust you if you really feel that that’s the best thing to do,” and, in other circumstances, I may use my knowledge and experience from working on the channel in longer than their working on it and advise them. Oba: So, you think you give match autonomy or freedom to the local offices when they decide programming. Schofield: Yes. There is always a big amount of autonomy and trust that I give them in that we hire people with programming experience that have worked in the local channels before and know their audience. But also, it comes down to that I have worked with Cartoon Network probably longer than they have, so there is a good level of an information sharing and discussion and compromise. Oba: I heard Cartoon Network Taiwan have to be approved by Hong Kong headquarters when they want to, for example, acquire some programming. Schofield: We still control the money from here. I’m managing the acquisitions budgets for all of the feeds. So, it does come to us. Gary will be the first point and look at it. And then, he sends screeners to me and says, “Watch this. I will like it,” and, in some cases, he will say, “I would like to get this,” and I will say, “I don’t think it’s very good, and we are not going to pay that kind of money.” So, I do have the final say of what gets bought, but I trust his inputs a lot. We do discuss where we think it’s valued, how far we want to go to acquire, or when we don’t pursue it anymore. Oba: Cartoon Network gets local channels like Cartoon Network Taiwan to put sufficient amount of investment in the development of Cartoon Network Originals. Are they obligated to invest some money? Schofield: Yes, the U.S. will pay the largest percentage, and then the rest of the world will share the remaining costs. Then, it is divided up, so we are paying for the Cartoon Network Originals. Oba: What’s the main reason for this? Schofield: Because it supports all of our channels around the world. These are brands, our characters. We can merchandise them, and we can license them. We want to show the work on our channel we have a 100% ownership. We don’t want to be running channels as purely acquisition channels for each local market. So, it’s only fair that with the U.S. having a largest population and being the largest market, they pay the largest sum, but they don’t just give us that content for free. We pay a portion of that content, and then we are making ad sales revenues, distribution revenues, and merchandise revenues. They are toward Asia’s net revenues to be made. So, there is a cost to making those revenues.

310 Oba: Cartoon Network Japan says they should always be offering certain amount of CNOs. They think affiliates of your network have to share some programs so that they can keep a global brand. Do you agree with this? Schofield: The volume varies, because it’s a struggle between ratings and between brands. So, in somewhere like Taiwan, we need the Japanese cartoons to drive ratings, but we need our cartoons to be there to reinforce our brand. That is the difficult one, but it’s important for all our channels to have some presence of our own cartoons there, so kids understand. Even if they don’t know that these are the cartoons that are made by Cartoon Network, when we are putting merchandise on shows, they’ve seen it before. Oba: Actually what’s advantage to be part of a global TV network like Cartoon Network? Schofield: The resources can be shared, which is not only the cartoons that get made in the U.S. that we pay for. We pay to use them for all rights in perpetuity, so, unlike license of a Japanese show for three or four years, you will get to use something like the Powerpuff Girls as long as you want to use it, because you have contributed to the making of it. You can put merchandising there. You have a brand that extends worldwide. When people are traveling outside of their own countries, they can see that this brand is in many other countries. So, we are all helping each other with that kind of brand presence. We share marketing materials. We can share on-air promotional materials. So, there is a certain pulling and sharing of resources that come from having networks that are all working, which saw the same content.

311 APPENDIX L INTERVIEW WITH SPORTS-I ESPN

March 14, 2006

Hase: There are two contracts between ESPN and J Sports. One is the so-called “content supply contract,” under which ESPN provides Japan with programs. The other is the naming rights contract, which enables us to use the ESPN channel name. Oba: Would you tell me about the ratio of foreign-produced content to Japanese-made content currently shown on Sports-i ESPN? Hase: Overseas content accounts for about 50%. Anything apart from that is independently produced here in Japan. All our foreign ESPN content comes from the U.S. We don’t receive any whatsoever from ESPN Asia. ESPN U.S. collates a list and supplies suitable programs, for which they have the necessary broadcast rights for the Japanese market, to Sports-i ESPN. This is called a “bulk contract,” and it entails the supply of thousands of hours of offering material over a single year. At the end of the day, Sports-i ESPN chooses material from this list to broadcast. Oba: Does that mean that ESPN U.S. cannot supply Sports-i ESPN with every program they have? Hase: There are many programs, which cannot be offered in Japan for broadcast rights. Programs that cost us money to gain broadcast rights for are hard for us to get. On the other hand, there are programs, which are often not popular to begin with but, as they grow in popularity, become more expensive and eventually disappear from the list of content available on a bulk contract. The ratio of programs provided from ESPN is extremely low. Our current situation is that we can’t rely heavily on ESPN content to get by, and ESPN understands this. The Japanese market is not the kind of arena where you can succeed simply by copying ESPN U.S. or going along with them for the ride. Oba: Sports-i ESPN has been in Japan for about ten years now. Have you always maintained this point of view? Hase: No. Until last year when we merged with J Sports, we depended on ESPN much more. But, that doesn’t mean everything always went smoothly. Since the merger, both Sports-i ESPN and ESPN have been exploring new avenues, and we are now looking to establish a new type of partnership. On the 24th of this month, George Bodenheimer, president of ESPN, is scheduled to visit us here at Sports-i ESPN to discuss mutual possibilities. Even though ESPN has been the second-biggest shareholder in Sports-i ESPN for many years, the president has never visited Japan until now. Now that we have merged and have become the number one sports channel in Japan both nominally and virtually, ESPN are expecting big things of us. Oba: What is the situation with the fees you pay to ESPN for programming? Do you pay for each program separately? Hase: No, it’s a package, in which we pay a certain price for thousands of hours of content. After that, we are free to air what we please. It’s kind of like a lucky dip bag in a way. Oba: What is your channel’s budget for each program? Hase: That’s a little difficult to divulge.

312 Oba: Is ESPN important to you as a source of content? Hase: That’s a difficult question. We don’t get much of the so-called “killer content” from ESPN, i.e., the programs that make Japanese viewers think “I’d subscribe to the channel just to be able to see this program.” Far more often than not, we don’t have the broadcast rights to that kind of material, nor are we able to get hold of it through bulk contracts. “Sports Center” is an original U.S. program, but aside from that one, there’s nothing else about it that really stands out. The major content of ESPN U.S. are MLB (Major League Baseball), the NFL (National Football League), and the NHL (National Hockey League) broadcasts, but they do not have the rights to provide that material here in Japan. For example, MLB broadcasts are sold directly to Japan through Dentsu. We don’t get any baseball from ESPN. The same goes for American football, which is also sold directly to us by the NFL, without passing through ESPN. In this sense, there is not a great deal of major content aired in Japan. Oba: Are any of the programs you obtain from ESPN not dubbed into Japanese? Hase: No, they are all dubbed. We like to try different things with dubbing and subtitling. The programs we air are not completely the same as those shown on ESPN U.S. If we air live coverage, we always have play-by-play commentary in Japanese. During halftime of soccer matches, we cut back to the Japanese studio for commentary but then return to the arena when play restarts. We don’t show a great deal of live sports from ESPN but usually edit a recorded version, add Japanese commentary, and offer at a different time. As well, viewers’ interests are different between Japan and the United States, so we cater for our own audience’s tastes. For example, there are sports, which are quite popular in the U.S. but don’t have big acceptance here in Japan. The most popular program on ESPN and the one, which has the highest price, is Sports Center. We dub the sportscasters’ comments into Japanese when we offer this program, but we don’t show Japanese faces. The format of the show stays the same as it is in the U.S. We never do anything like adding footage here on the Japanese side. However, for example, we have a story about Major League Baseball. In Japan, any sports news without mention of either Matsui or Ichiro doesn’t go down well. The news stories we choose to air differ from those chosen in the U.S. For the moment, we are offering this program in exactly the same version as it is shown in the United States, but we are hoping to begin a version of our own in the future, something like “Sports Center Japan.” We would like to have more footage of Japanese athletes and more Japanese commentary, but at this stage, it’s a plan yet to be realized. Oba: The anchorpersons on Sports Center use of lot of American-style humor. Can your Japanese audience comprehend this? Hase: If it’s translated well, yes. WWF (World Wrestling Federation) programs are cleverly subtitled into Japanese. Subtitling actually costs more to have done than dubbing. You need to set down actual words on the screen, and so it takes more time. Oba: Are subtitling and dubbing really such an expensive process? Hase: Yes. Having someone listen to English speech and translate it into Japanese alone costs hundreds of thousands of yen. Oba: Is language a big hurdle when offering foreign sports programs?

313 Hase: Having to translate everything into Japanese is a big difficulty. Even if we are able to get broadcast rights for a program, we absolutely must have it translated into Japanese. That costs money. For other English-speaking countries, once they have bought the rights to the program, they can start bringing in revenue without any extra real costs. We don’t have that luxury at Sports-i ESPN. At the very least, we have to pay for translation fees: either subtitling or dubbing. Oba: Which sports are most popular here in Japan? Hase: Japanese baseball and soccer stand head and shoulders above the rest. It’s difficult to say what would be in third place, but I’d have to say right now fighting sports like wrestling are popular. Things like “Pride,” “K1,” and Japanese professional wrestling. WWE is also really popular here. Oba: What influence do Japanese viewers’ tastes have on your selection of content? Hase: The main focus of U.S. ESPN’s content is U.S. sports. Soccer leagues such as Serie A, the English Premier League, and the Spanish League are not offered much at all. It’s mostly American-centered. In contrast, there’s a European sports channel called B Sky Sports, which offers mostly soccer [like Premier League] and very little American NFL or MLB. Most sports channels around the world focus primarily on their local sports and show sports from other countries as a kind of bonus. Japanese professional baseball and J-league soccer is our main content, but European soccer such as “Serie A” is also popular, as is MLB. Japanese viewers like not only American sports but also soccer. So, they like a mix of a lot of different things. Japanese viewers have quite a mix of sporting tastes, which is quite unique. Not only do they want to see domestic sports, but there is also a certain amount of interest in foreign sports. However, with regards the offering of domestic sport in Japan, over-the-air broadcasters wield power. As a specialized sports channel, it’s quite hard for us to go for genres such as Japanese professional baseball or J-league soccer. We end up showing so much overseas sport. Oba: Why do Japanese have such broad tastes? Hase: Japan has always imported things from a wide variety of cultures. We brought in good things from the U.S. and Europe and created our own unique culture, one that arranges things in a Japanese way. I think that trend goes for sports as well. We learned baseball from the U.S. and soccer from Europe and created our own unique sports culture. And, I think that is reflected in what we play and watch. If you were looking for one, I’d say the only truly Japanese sport is sumo. Oba: As you said, there are some U.S. sports, which are popular in the U.S. but not so popular here. Why do you think that is? Hase: American Football is pretty popular in certain places, such as Germany, but it is only really popular in the United States. I think the biggest reason it’s not popular here is that there are no Japanese players in the NFL. And, even if there were any Japanese players, they wouldn’t really be active. The level of play is just too high. Also, because the players’ faces are hidden wear full-face protection, it’s difficult for the viewers to empathize with the players. In addition, the rules are complicated and difficult to follow. Most Japanese viewers don’t even try to figure them out. I think the number of

314 Japanese interested in American Football is quite low. And, people who have never lived in places where they could develop an appreciation for the sport, such as in the U.S. itself, have very few chances to see the sport. I think the people who have lived in the U.S. make up a very small proportion of our viewers. But again, the main reason for its non-popularity is the lack of Japanese professionals. The Japanese media don’t pick up American football. There are some broadcasts of games on late-night over-the-air television, but it’s not enough to get people really into it. Oba: What about the NBA? There are no Japanese players in that league, and yet it’s reasonably popular, isn’t it? Hase: When Michael Jordan was playing, yes. Jordan was the kind of superstar who transcended race. That’s why there were many people who watched the NBA just to watch Jordan. When he retired, the popularity of the NBA in Japan declined. It’s the same with golf. There are people who want to watch golf just to see Tiger Woods play. But, superstars who can transcend race like Woods and Jordan are rare. The NFL’s Joe Montana didn’t ever make it to such a status. Oba: People say that sports cross borders, but are sports programs also able to do that? Hase: I think so, but sports that are popular in Japan tend to be the ones in which Japanese are active. There are not so many cases of sports without famous Japanese players becoming popular. As I mentioned earlier, the NFL’s popularity in Japan is pretty poor. I think the influence of having a Japanese star is huge. When Japanese drivers broke into Formula One racing, its popularity took off. Soccer, too, started becoming more accepted as more Japanese players went to foreign leagues. It’s difficult for sports played exclusively by foreigners to succeed here. Tastes in sports programs clearly reflect national character. So, I think music, for example, is far more easily exportable than sport. We are trying our hardest, but there are not a lot of cases in which American sports have really succeeded overseas. The U.S. doesn’t import much foreign sport, either. It’s as if there is an invisible barrier. I feel things like music and movies are more readily accepted overseas. Oba: So, it’s not so much as case of whether the sport itself is popular, but whether or not there are famous Japanese players? Hase: I think so. There are currently no Japanese players active in Serie A. As a result, we have seen the league’s popularity steadily dwindled. Our core fans are still there, but we have ended up losing a lot of the “bandwagon types.” Oba: Does the presence or absence of Japanese players in a given sport influences the programming decisions of Sports-i ESPN? Hase: It does. But, the difficult thing is, if we focus too much on a Japanese player, then if that player leaves the scene, a lot of those bandwagon-type viewers stop watching our channel. Take for example the German Bundesliga. If we want to increase the number of long-term fans, we have to consider showing viewers the most interesting and exciting aspects of the league and having them understand it rather than simply blanket coverage of Japanese players. Having viewers come round to the idea that watching sport from different angles is interesting is vital in building a stable and loyal viewer base. Oba: I don’t think there would be any Japanese sportspeople featured on the

315 programs on the lists of content you are sent by ESPN U.S. In that case, how do you make judgments about what content to air? Hase: There are no real standards. In such a case, we weigh up the value of the content in terms of the sport itself and whether it would be popular in Japan or not. Oba: Which sports have high value in Japan? Hase: Within the content sent by ESPN, the Scottish soccer, and probably Sports Center. Also, maybe “X-games,” although it is still quite a minor sport here. In the U.S., X-games are popular, but here their value in terms of a program contract from ESPN is not that great. Oba: Don’t you think American-produced sports content is relatively superior? Hase: That depends on how you look at it and on what sports you like. There are some aspects of sports like soccer, golf, and cricket that make it seem like the sport just evolved naturally, as if people invented these sports while just playing around. In contrast to that, you have sports like American football and baseball, which were devised by people with the sport on their mind. In that respect, I think American sports and European sports have very different origins. Oba: Generally speaking, which do Japanese viewers prefer? Hase: That’s a good question. Since baseball is so huge here, I would have thought American sports, but aside from baseball, there’s not really much support for American sport. Americans don’t really recognize a sport, unless an American is number one in it. So, they create their own sports, have their own athletes become the best at it, and then give their championships names like “World Series.” This runs counter to the European way. Many countries in Asia were once colonies of European countries, and as such are closer to Europe in terms of culture. But, Japan has a strong American influence. Perhaps, it’s a blend of both American and European influences. Oba: How many subscribers do you currently have? Hase: About 6.5 million. Of these, 1.5 million subscribe through Sky PerfecTV and the other 5 million through cable contracts. Oba: What are the characteristics of the viewers Sports-i ESPN is targeting? Hase: 90% of them are male. They are aged in their late twenties to early thirties. I think there’s some influence from the X-games in that. Oba: What are their economic attributes? Hase: In Japan, people who subscribe to multi-channel contracts are high wage-earners. Oba: How do you see the economic status of Sports-i ESPN’s subscribers compared to that of other channels’ subscribers? Hase: I don’t know. However, I don’t think there is such a discrepancy across channels. Sports-i ESPN comes in the basic pack with other channels on Sky PerfecTV or other cable TV networks. These packs provide 30 or so channels for a set subscription fee. Not many subscribers buy these packs, just so they can watch Sports-i ESPN. Oba: Are there any striking similarities or differences between Japanese and American viewers? Hase: In the United States, having ESPN is almost a necessity. Most people don’t subscribe because there is a certain sport they want to watch, but because having it is like a must item. Sports channels in Japan are yet to reach such a

316 status, and people subscribe after thinking that they want to see something particular. Perhaps, it’s a bolder type of person who subscribes here. That is an area where Japan differs from the US. Oba: Do you think it’s possible to trade content between foreign markets with similar viewer levels? Hase: That all depends on the broadcast rights. If Sports-i ESPN has these rights, then we can sell content. But, with regards the broadcast rights of foreign content, Sports-i ESPN does not hold rights for most other Asian countries. The rights we have are restricted to Japan. Oba: Are there any restrictions on the amount of content you can bring in to Japan? Hase: No. We could have all foreign-made content if we wanted to. Oba: How does the lack of such restrictions influence your programming strategies? Hase: It has no real effect. We only air quality content anyway, so it’s not really relevant. Oba: What is the ratio of subscription-generated revenue to advertising-generated revenue? Hase: About 9 to1or 9.5 to 0.5 with subscriptions bringing in far more revenue. The market for advertising is still quite small. The U.S. market is far bigger. Oba: Do platforms, such as Sky PerfecTV or the cable operators, give opinion into programming decisions? Hase: No, there’s none of that. However, as a shareholder, Sky PerfecTV does take part in discussions and other exchanges of ideas. Oba: Does ESPN invest in any other channels in Japan? Hase: No. Oba: What kind of advertisers do you tend to attract? Hase: It’s not really predetermined, but Sports-i ESPN’s main client is Honda. They have sponsored a program called “Moving You” for many years now. We have a lot of advertising from companies whose image matches that of the channel, such as sports brands like Nike and Adidas. Oba: Do these advertisers have a say in your programming decisions? Hase: No, but they do give input into the programs they sponsor. I’m not a producer, so I can’t give you any details as to what they request. Of course, as sponsors, they have the right to do this, and programs are made based on this kind of influence. This doesn’t go for spot commercials, though. Oba: Does ESPN mount any campaigns for a firm on a global scale through each country’s affiliate? Hase: I’m sure it does happen, but I don’t know exactly what kind of companies run such campaigns. Within the contract with ESPN, there is a clause, which states such sponsors can be added. Oba: ESPN is a strong brand in the U.S. How about here in Japan? Hase: It’s still not really strong. Anyone who has lived in the U.S. knows of ESPN, but still few Japanese have heard of it. There are not so many people in Japan who sign up for a multichannel package, so they can watch ESPN. Also, there is what’s called a corporate contract, so we are well recognized by foreign firms and hotels that subscribe to our network. But, as to whether the ESPN brand name has established itself in Japan, I’d have to say no.

317 Oba: What kind of programs do foreign corporations or hotel guests expect from Sports-i ESPN? Hase: That would be Sports Center or the four major sports. Oba: Those kinds of viewers probably expect to be able to see the same programs in Japan that they can in the U.S. So, is that expectation reflected in your programming decisions? Hase: No, it isn’t. Again, in reality, we have to deal with the issue of broadcast rights. In most cases, ESPN has only the rights to broadcast in the U.S. As long as this is the case, it’s impossible for Sports-i ESPN to broadcast that kind of material. Oba: How are you going about improving the brand image of ESPN in Japan? Hase: Since many of ESPN’s programs do not come with broadcast rights for this country, I think ESPN and J Sports should work together to obtain the rights for broadcasting in both the United States and Japan. One way they could do this is to jointly purchase some programs. Japan has only the Sports-i ESPN channel at present, but I think another way to boost the image is to diversify into other areas ESPN U.S. has, like the ESPN Zone cafes, apparel, and mobile phone web services. The marketing rights for ESPN are held by a separate corporation, so Sports-i ESPN cannot currently sell ESPN products independently, but I’m sure we will go in that direction in the future. Oba: Which channels are you in competition with? Hase: All of the channels dealing with all-Japanese sport are associated with J Sports. J Sports 1, 2, and 3 used to be our direct competitors, but since Sports-i ESPN is now a channel owned by J Sports, we are no longer rivals. Then, you have GAORA and Sky A, but they also have entertainment content. About 70 to 80% of their programming is sports, but I don’t think you can call them pure sports channels. Oba: How does ESPN currently rank Sports-i ESPN? Hase: The firm is actually J Sports rather than Sports-i ESPN, but it is considered a vital partner for the Asian region. I think we are seen as a bridgehead into the Asian market. ESPN is a success in the U.S., but on a global scale, it is not so successful. It only airs American sports and hasn’t localized its content for other markets. Oba: How is ESPN dealing with that? Hase: It’s true that there’s no clear-cut answer to that, but I believe they are, along with J Sports, committed to improving the influence and the image of the ESPN brand throughout Japan and the rest of Asia. Oba: Do you think ESPN is skilled at doing business internationally? Hase: ESPN have established ESPN STAR Sports for Asia, but I don’t know how serious they were or how much effort they put into it. They have broken through in South America, but there’s not really a track record of them expanding outside of the American continent. The same could be said of American sports in general. Whether for the NFL or the NBA, there’s not really a lot of effort put into expanding coverage overseas. The NFL makes enough money with just the domestic market, so it’s a big drop-off for them from the domestic to foreign markets. In terms of numbers, the domestic/foreign ratio is about 100 to 1. Most U.S. sports leagues and associations thought the American market alone was enough for them. If these sports don’t make the move to foreign countries, then it’s difficult for

318 ESPN to do the same. On the other hand, if ESPN changes its approach, things will change. For example, they might air mostly soccer in Europe and compete with B Sky Sport for broadcasting rights to the Premier League soccer. I don’t think they are taking such action at the moment. Rugby is popular in Australia and New Zealand, but ESPN are not trying to secure broadcasting rights to rugby for that market, while Sky Sports is. Oba: All things considered, what is the greatest influence when choosing content? Hase: Cost-efficiency. In other words, how much revenue we can expect for a given amount of spending. Our revenue is linked with how highly our viewers rate the programming we provide. For events like the Olympics or the Soccer, the viewers are obviously happy to have coverage, but the costs involved are enormous, and in the end, it just doesn’t pay off for us. We choose to air programs, which are balanced and will give the greatest possible cost efficiency. In addition, there’s always the idea of cultivating our viewers through Sports-i ESPN. We have cultivated our viewers through things like the famous cycling race through France, “The Tour de France,” which we have offered for many years. We also did this with American professional wrestling. It’s quite hard work. Professional wresting is popular in the United States, but it’s not something on ESPN. We have to purchase professional wrestling content from another source. Oba: Are you saying that you buy content from a rival company of ESPN? Doesn’t ESPN have anything to say about that? Hase: No, they don’t say anything. Ultimately, it might be all right if we could offer all U.S. ESPN content exactly as it is, but it’s extremely difficult to do that because of broadcast rights. We have no choice but to compile our own programming. Oba: At the moment, ESPN takes virtually no part in deciding what content will be aired. Hase: That’s correct. However, whatever we say about them, ESPN is still the world’s largest sports channel and the world’s most successful. For that reason, we want to learn from them as a business model. There are many things they can show us. Oba: What things, for example? Hase: Well, how to initiate management diversification, for example. And, from a brand perspective, the fact that U.S. households see ESPN as an essential media entity, like CNN and MTV, rather than subscribing because they want to see a certain thing ESPN offers. I think U.S. subscribers think about what they want to watch after they have signed the subscription contract. We want Sports-i ESPN to become a channel like that. So, there is a lot we can learn about that from ESPN. We want to know what kind of transitions ESPN went through to get to where it is today. ESPN has immense program buying power, so we would like to be a part of that, also. However, I don’t think it is working well if we only receive content from them in a one-way arrangement.

319 APPENDIX M INTERVIEW WITH ESPN TAIWAN

July 24, 2006

Chen: Actually, our programming arrangement is designated by the Singapore office, our headquarters, but they have different strategies for different areas and countries. In Taiwan, most popular sports are baseball, basketball, and pool billiard, nine ball and snooker. In a lot of other countries of Asia, people love soccer, but it’s not very popular here. We like basketball and baseball. So, we choose these kinds of sports here just for Taiwan. But, for strategy, we buy programming for the whole Asia. Then, we can choose our own games and matches we want for Taiwan. For MLB (Major League Baseball), we always choose Wang Chien Ming’s games from Yankees. Other countries don’t choose them. For soccer, we need to watch other country’s choice. Female Chinese players were very strong in Wimbledon and Australian opens this year. We wanted to watch a lot of Chinese players here. Most of programs are purchased for all areas, but we can choose the matches we want. So, the difference among countries is matches and the percentage of programming. For example, high percentage of our programming is basketball and baseball. We create a lot of local basketball and baseball events here. In other countries, the highest percentage is soccer. They have English Premiere League, Spanish League, and Italian League. Oba: What’s the ratio of foreign-produced content and Taiwan-made content shown on ESPN Taiwan? Chen: Maybe, it’s 80 to 20. 80 is foreign, and 20 is local. But, we are trying to increase local events. Right now, we have SBL (Super Basketball League), the local semi-professional basketball league, for Taiwanese. We are trying to show more baseball and basketball, something like high school basketball and high school basketball, and some international events in Taiwan. So, we are trying to increase the percentage, but right now, I think it’s just 20%. Oba: How do you specifically localize imported programs to Taiwan so as to cater to Taiwanese viewers’ demands more suitably? For example, you might be able to add Chinese language by subtitles or dubbing. Chen: We just have presenters and commentators speaking Mandarin. We have no subtitles. We think sports don’t need much subtitling, because fans can understand how the game is going. Oba: I understood almost all programs offered in Taiwan have subtitles. Chen: Taiwanese viewers rely on subtitles. If they listen to foreign language, they will skip it. It’s a habit. Oba: Do you have some programming offered without any Chinese subtitles or commentary? Chen: We have programs just in English, like sailing and some soccer games. We think they are not very important to Taiwanese. The Singapore office doesn’t do any commentary or subtitles. Oba: Do you think you should add Chinese commentary even to that kind of unpopular programming for Taiwanese viewers? Chen: Yes. Oba: Why don’t you do that?

320 Chen: Because they need costs. Oba: Is it true that subtitles cost a lot? Chen: Right. And, we think the most important thing for localization is the match. For MLB, Taiwanese people like to watch Taiwanese players like Wang. We try to get Taiwanese players’ games here when we broadcast MLB games. For the NBA (National Basketball Association), Taiwanese people like some specific players. They don’t like all players but some famous players, like Kobe Bryant or Kevin Garnett, or famous teams, like Lakers or Heat. Even if we choose and broadcast foreign games, we will try to meet Taiwanese interests. Oba: I was watching ESPN last night and found you were offering a Japanese professional baseball game. I wonder if there is sufficient demand among Taiwanese viewers for Japanese baseball games. Chen: We have a Taiwanese pitcher, Lin Ying Chie, in Rakuten. So, we purchased Rakuten’s home games this year. If a Taiwanese player plays for a foreign team, we will try to purchase the team’s games. For example, more and more Taiwanese players go to Japanese League. So, we will try to increase their home games. But, when we purchase the home games, the NPB (Nippon Professional Baseball) is not like MLB. We buy the rights to NPB games from teams, while, for the rights of MLB games, we are talking with the association. If we want to broadcast NPB, we can broadcast just one home team’s game. So, we will choose a team, which Taiwanese player is with. For example, we broadcast Seibu last year. This year, we have two Taiwanese players there, but one is in the minor league. So, we just broadcast Rakuten this year. Oba: When I had an interview with an executive of Sports-i ESPN in Japan, he said that Ichiro and Matsui, baseball players originally from Japan, are of course very popular among Japanese, but it’s very hard to get broadcast rights to Major League Baseball games in Japan. Is that the case for you? Chen: No. I heard that NHK has the rights to all top Japanese players. I think he said it’s tough to get the rights maybe because of NHK. But, because we have focused MLB for many years here, we have a very good relationship with MLB. Of course, other TV stations can also buy the games, but we will have the first choice for cable TV. In this year, PTS (Public Television Service), which is similar with NHK here, also broadcasts Wang’s game here. So, they are our competitor this year, but they are terrestrial TV. For the cable, we have the exclusive one. Oba: I also watched the Taiwanese version of “Sports Center.” Sports Center is very famous programming in the United States. Why don’t you just put the U.S. version of Sports Center but produce your original Sports Center for Taiwanese viewers? Chen: Taiwanese people don’t like to see too many foreign faces and languages, because most of Taiwanese don’t know English well. They rely on subtitles, but subtitles are very expensive here. We have a very big problem. Almost all of our production teams are based in Singapore. We have a small crew here, but a lot of production works are done in Singapore. They cannot use subtitles. They just hire Taiwanese people who go to Singapore to put the Taiwanese commentary in the program. And, Taiwanese also like local things,

321 so we need to use some local news for Taiwanese viewers. It cannot work if we just put American Sports Center here. Oba: You said some specific professional teams like Los Angeles Lakers are very popular in Taiwan, though. Chen: Taiwanese still prefer local things more than popular foreign things. For example, Videoland Sports has local sports news. The news is 45 minutes, and they just have 15 minutes for talking about foreign news. For the most part, they report local things. Most of local news are not very important at the international stage, but Taiwanese viewers like to watch them. Ratings are always very high and higher than Sports Center. That’s why we always try to do the local. Oba: As for foreign-produced content imported to Taiwan, is this always shared with some ESPNs in other countries? Can it be dedicated only for Taiwan? Chen: It depends. The NBA may be shared except for India, because Indians don’t watch basketball. Other countries have the right to broadcast NBA games. MLB may be just for Southeast Asia and Taiwan. Just two areas broadcast MLB games. If we broadcast golf or tennis, it will be covered by the whole Asia. So, it depends on programs. Sometimes, foreign programming is just dedicated for Taiwan. Do you know “Williamsport Baseball”? It’s a junior baseball game in America but a worldwide event. It’s a little league. Just only Taiwan liked to broadcast the game, because Taiwan had a team to join the event. Oba: Other ESPNs didn’t have any interest in the little league. Chen: Right. Oba: What’s the specific reason to share programming with other ESPNs? Chen: It depends on the market needs. They will request the programming or say, “No, we don’t want to broadcast it,” because the cost will be shared by all markets. So, if you want to broadcast the game, you need to share the cost. The Singapore office will ask all regions if they want to broadcast. Oba: So, they have a kind of programming list, and you can choose from that. Chen: Right but not all of programs. We can choose most of programs but not all. For example, costs are very low for some programs. Then, the programming department in the Singapore office doesn’t need to ask. They can broadcast directly. Oba: Is it difficult to choose the right programming for Taiwanese viewers? Chen: We just care for the program on the prime time or the important event. If they are broadcast in the afternoon or in the midnight, we don’t care them a lot. The Singapore office can choose by themselves to put some programs there, because when you purchase one program, they will buy another. It’s a whole package. We just want major programs, but there will be other unimportant events attached into the package. We need to broadcast the other events maybe in the midnight or in the afternoon, which are not our care. Oba: Do you mean I can watch the same programming both in Taiwan and in Singapore in the midnight or in the afternoon? Chen: Yes, but the prime time would be totally different. Oba: Given some programming shared among ESPN Network, is that available to you for free? Chen: No. As I mentioned, the cost is shared by all markets. So, if we want to take the program, we need to pay.

322 Oba: Is that shared equally? Chen: Not exactly. It depends on hours. For example, we have two NBA programs one week, and Hong Kong has three. So, we may pay less. Oba: But, sharing programming with other ESPNs is much cheaper than producing local content by yourself. Chen: No, it’s not cheap but very expensive. Actually, doing our own programming is cheaper than purchasing the rights to sports games. Sports rights are very expensive. Our new MD (managing director), who is just on board, emphasizes to produce our own programs, for example like magazine shows or sports-related programs here, because the cost is much lower than purchasing the sports rights, especially for the international programs. NBA or MLB games are very expensive, even if we share costs with other countries. Oba: ESPN Asia has some contracts with MLB or the NBA. Chen: Right. We share NBA and MLB games with other countries, but for MLB games, we have more games. We have three games a week, but other countries maybe just one or two games. Oba: In spite of the advantage, your local programming is just 20%. Why? You might have 100% of local programming. Chen: It’s quite difficult to define which is local or international. 20% local is just dedicated for Taiwan like SBL or some international games, which are shorten. As I mentioned, we are trying to increase the local content, because the costs are lower, and the ratings are higher. But, if we initiate local content, we need to find out local important events to broadcast, because it’s different from variety programs. You have to find the game and broadcast it. So, local events are not easy to broadcast, and we have other competitors to broadcast the local events. So, we need to look for our local events, for example like CPBL (Chinese Professional Baseball League). The Videoland has rights to all the games. If we want to broadcast it, we need to share with them. You need a lot of negotiations. Oba: Do you think you rely heavily on ESPN’s international network for programming? Chen: Actually, we still rely on the regional programming, because we have no independent department here. It’s a problem of organization. If we have an independent department here, we can choose by ourselves. But, right now, Singapore has the key men to decide which programming is in which area. Oba: You mentioned earlier that you have 20% of programming domestically, but where is the 20% of programming is decided? Chen: Here. But, we still need to let Singapore know local programming. They need to approve it. All of our programs need to be approved by our board or senior management. If we initiate some local programs here, we need to get their approval. Even if it’s 20%, they need to agree. Oba: I don’t know exactly the difference between ESPN Taiwan and STAR Sports Taiwan. Chen: We have two channels for our programs. We have two brands. These two channels are belonging to our company. Oba: What is the difference in terms of programming? Chen: For ESPN, we have most of popular programs in Taiwan, like basketball, baseball, and pool. And, for STAR Sports, we will have a variety of

323 programs, which have more entertainment and more fun, like motor sports, tennis, rugby shows, soccer, and something like that. ESPN would be more professional. If we just define them basically, we have different personalities for the two channels. Oba: Which one is more popular? Chen: ESPN, because Taiwanese people think STAR Sports is one of channels of STAR TV. Another reason is the Mandarin title of STAR Sports. It is too complicated and too many words. ESPN is very famous here and easy to understand and recognize. For the sports industry, whether players or fans, they all know ESPN U.S. So, they see ESPN quite professional and international. STAR Sports is quite weak. So, we try to improve the branding of STAR Sports by the new personality with variety and entertainment, not by so serious sports. Oba: People sometimes say that sports cross borders easily compared to dramas or comedies. Do you think sports programming is also able to easily cross national boundaries? Chen: Yes, of course. Oba: Don’t you think the preference of sports programming is bound by each culture? Chen: Taiwanese are America-oriented. So, part of culture is quite similar between America and Taiwan. For Taiwanese and Americans, sports orientation is very similar. For example, Americans don’t like soccer, and Taiwanese, either. Taiwanese like basketball and baseball, and Americans, too. China and Taiwan are actually quite different. China likes soccer. But, there are still some sports, which Taiwanese and Chinese also like, like Basketball. So, it depends on the category of sports. Oba: Do you mean in general Taiwanese and Americans have very similar preferences? I don’t know if the U.S. and Taiwan have very similar culture. Chen: The whole culture is different. But, for sports, Americans exported a lot to Taiwan. Many Taiwanese are also planning to go to the U.S. for their study, or families move to America to live. It’s a kind of similar culture. Americans influence Taiwanese a lot, but England or other countries don’t. Oba: Do you mean Taiwanese preference for sports is very much influenced by America? Chen: Yes. Oba: What about the influence of Japan? I found a lot of Japanese cultural influences in Taipei. Chen: The question is very interesting. Baseball is influenced by Japan. But, for other kinds of sports, I don’t think so. For example, basketball is not very popular in Japan, but it’s very popular here. I think sports culture now is seen as a lifestyle. I don’t know why other lifestyles are imported from Japan but not sports. Oba: Again, what sports are most popular here in Taiwan? Chen: Basketball and baseball. Oba: Do you find any specific reasons? Chen: For basketball, it’s because the national team is great. We’ve ever played at the Olympics and won the second place in twelve years ago. I also believe it is because it was imported by the U.S. For baseball, we call it the national sports.

324 Oba: How about American football? Chen: No. I think it may be hard to understand. ESPN broadcasts the NFL (National Football League) games. Actually, generally speaking, sports are not very popular here unlike Japan or Korea. People here like variety shows or maybe movies, but the rating of sports channels is not very high. So, just one channel, ESPN, broadcasts NFL games. Actually, not many audiences watch the program. But, there are three stations broadcast NBA games. A lot of channels broadcast baseball. Some variety channels also broadcast baseball and basketball. But, the NFL, softball, tennis, and golf are just broadcast by sports channels. So, they cannot be very popular. Oba: In a nutshell, how do you think Taiwanese viewers’ tastes or preferences impact your programming or your choice of content? Chen: We still watch the rating. We can analyze the rating from Nielsen to decide our challenge. We still do our own study for the market to choose what programs we will broadcast. Oba: Do you think the audience rating indicates the popularity of programming? Chen: Of course. Oba: I think sometimes it depends on what your competitors do. If your competitors offer the most popular program in Taiwan, you may not be able to get higher ratings even with MLB games or your killer content. Chan: Right. The World Cup soccer is an example. When the World Cup soccer was played, we had Wimbledon tennis. So, the rating was very low. But, it’s just for some very important events. Oba: Do you have any regulations on foreign content imported to Taiwan? Chen: Just a little bit. For example, we cannot show bloody wrestling matches. Our channel needs to be kept as a general channel for all ages to watch. Wrestling is sometimes a little violent. I don’t think other programs will have limits. Oba: You are not allowed to offer violent wrestling shows. How do you decide if this might be against the regulation? Chen: Our monitoring department will check in advance. They will check out the programs before they are aired. Oba: That’s the self-regulation by yourself. Chen: The Taiwanese government will notice us if we have some programs, which are against their regulations. Another thing is gambling like horses or dogs. We cannot broadcast gambling horses or dogs. Oba: Are you not allowed to offer gambling programming by the Taiwanese government? Chen: Right. The monitoring department is also in Singapore. We will tell the regulation of the Taiwanese government to them to check if we have any illegal footage. They will check and monitor it. Oba: Is the gambling program OK in Singapore? Chen: Yes, it’s OK in Hong Kong and Singapore. Oba: You can’t share those programs with Hong Kong or Singapore. How do you think that kind of regulations influence your programming? Chen: We can air the racing after 9 o’clock in the evening. Before that hour, the Taiwanese government has regulations for some programs, which cannot be shown to children. They will have a kind of limits. If we have bloody footage, the government will call us to pick up. Oba: Do you have any limit for the amount of imported programs?

325 Chen: I don’t know the number. Oba: What kind of advertisers and clients do you attract? Chen: We have different types of clients for different programs. For golf, we have cars, banks, and some products for senior people. For basketball, we have drink and consumer products more. Oba: Can you specifically tell the name of clients? Chen: Lexis sponsors our golf events a lot and tennis. Hey Song drink sponsors our basketball and baseball. Nike and Adidas are also our major clients. Oba: Which one, domestics or multinationals, is more important for you? Chen: All are very important to us, because they continue to sponsor our major programs. For example, Chung Hwa Telecom, a big local telecom company, continues to sponsor our SBL, a basketball event. Nike is also our major sponsor of SBL. Hey Song also sponsors our basketball and baseball, MLB games. So, they are very important to us. Oba: Do they have any requests for your programming? Chen: All of their requests are about ratings. So, we need to get our ratings higher. They just watch the rating report, which will influence their costs. Sometimes, they will care about events. For example, if we initiate some local events like SBL, they will ask us to make some events for them, and we broadcast the activities on the air. They want to be involved to many programming things. Adidas will want us to broadcast the game of Adidas players like KG (Kevin Garnett) or T-Mac (Tracy McGrady) or like Bulls or Magic. We still need to balance our matches, but we will put a little more Adidas players. Oba: Do cable operators have any requests for programming? Chen: Of course, they will have input about the rating. They want more households and more audiences. Oba: How many sports channels do you have in Taiwan? Chen: 24-hours sports channels are just three, ESPN, STAR Sports, and Videoland Sports. Videoland has five channels. They have one dedicated sports channel but also broadcast sports events on other channels. For example, Videoland Variety, another channel, broadcasts sports like local baseball and local basketball. Oba: Do you think the Taiwanese market is very competitive in terms of sports programming? Chen: Yes, because other channels, which are non-sports channels, also want to broadcast some important events. For example, most of channels would like to broadcast Asian baseball games. So, it will be very competitive. We need the competition for the program, which is very popular. Oba: How are the Taiwanese market and ESPN Taiwan strategically important for ESPN? Chen: I think, of course, it’s not the first priority to them. But, Taiwan is the core, important market in Asia. Perhaps, Taiwanese people have very powerful purchasing power and high incomes, which are very important to them. The sales revenue of Taiwan is very high. So, it’s a potential market for them. And, they think Taiwan as the gangway to the Chinese market. Taiwan has some similar culture with China. For example, the language is similar, even if not the same. Oba: Is Taiwan a potential market for ESPN?

326 Chen: As I mentioned, sports are not very popular here. It’s a very potential market. We have the space to improve. Oba: How many years have you had ESPN in Taiwan? Chen: Ten years. Oba: It’s not a short time period. Chen: Yes. In the past, we had no local content. All programs were American or foreign. Even for Sports Center, we broadcast the U.S. version. Sports Center just has four or five years. It indicated Taiwan the local production. Oba: Is it now popular among Taiwanese viewers? Chen: I cannot say it’s popular. It’s just popular to sports fans but not for all Taiwanese people. All of our ratings are not very high. We are famous for sports fans but not for most Taiwanese people. Oba: ESPN is a strong brand in the United States. What’s the situation in Taiwan? Chen: It’s also famous but just among sports fans. As I mentioned, sports are not very popular here. So, just young people or some senior people, who like golf or tennis, watch. Most of Taiwanese viewers don’t watch sports. Oba: What images do Taiwanese generally have for ESPN? Chen: “The worldwide leader in sports.” That’s very true. Oba: In spite of ESPN’s international image, it seems to me that ESPN Taiwan is not necessarily eager to offer international programs. For example, you want to broadcast games more related to Taiwanese. Meanwhile, STAR Sports broadcasts foreign games unpopular among Taiwanese, like soccer, rugby, or motor sports. In this situation, I think the international image is more appropriate for STAR Sports. What's your idea? Chen: I think it's because of the image. ESPN is a very famous sports channel in the world, so Taiwanese audience looks it's an international brand. Of course, STAR Sports is also international, but it's not popular to audience. Oba: So, people usually associate ESPN with global and international. Why don’t you offer more international programming? Why do you try to increase domestic programming? Chen: As I mentioned, most of viewers like to watch local and relative programs. Even if they watch MLB games, they want to watch Wang and Taiwanese players. When they watch Japanese baseball, they want to watch Taiwanese players. So, what we do is to use the international sources to support local sports and to develop local sports into the international level. They will appreciate ESPN, which is international-based, but what we do is for locals. Oba: Do you think you should offer the same programming in order to keep the brand image all over the world, or the brand image and programming are totally different? Chen: I think the brand image depends on what content you provide audiences. But, audiences don’t care about what programs are broadcast in other country. They just want to watch what they like. Whatever other country broadcast, they don’t care. For example, they just want to watch NBA or MLB games but don’t care if other countries have the World Cup or cricket. Cricket is extremely famous in India, but people here don’t care about cricket. They don’t even care about soccer like Europeans. Branding is to support people to pull in to the channel. But, if they like the channel depends on the content. Oba: What country is famous as the country of origin for excellent sports programming in Taiwan?

327 Chen: Actually, if the quality of games is higher, it’s good enough to watch. People just prefer the category. For example, we broadcast the World Cup Baseball, which was played in Cuba. The quality of programming was very low. They had no graphics, but people watched it, because of content and because people just wanted to watch baseball. They don’t care about the quality. Of course, if the quality is high, for example like the broadcast of NPB or MLB, it will be very interesting, but it is not the key point to their choice. Oba: It’s an overall question. How important is it for you to be part of ESPN’s global network? Chen: Actually, we have more disadvantages than advantages. We have a lot of programs for foreigners. As I mentioned, we just care about the prime time. For non-prime time, we broadcast foreign programs. Some local people, who are living in the mid or south of Taiwan, don’t understand English a lot. So, when they watch ESPN’s character, they will skip it because of the English language or touch. It’s our problem. And, even if we share programs with other countries, it’s quite expensive. We don’t have a lot of advantages but a lot of problems from them. The only advantage is that we have an international brand image to most experienced people. Even if we do the local programming, for example SBL, the quality is higher than local television and Videoland. Our broadcast team and ability are better than them, because we have producers who came from Singapore, the U.S., or Europe. And, we have the international know-how. The know-how is difficult to learn from locals. Oba: So, do you think ESPN is generally very expertise in the international business or producing programming internationally? Chen: Our production teams produce events just for the whole Asia. Their ability is of course better than local television. We have very high status in the production. If we produce a local event, our budgets are higher than other competitors. Our quality is also better than them. To viewers, they will appreciate our quality. It’s quite our advantage. Oba: You said earlier that programming quality is less important than content itself with an example of the baseball telecast from Cuba. But, you say now quality is very important. Chen: I mean priority. Viewers also can accept lower quality. But, if they have two choices for SBO, for example, if ESPN and Videoland broadcast the program at the same time even for the same game, they can see the quality difference. Of course, they will choose higher quality. But, if they have just one choice, they don’t care about a lot. Oba: Do you have freedom to decide programming independently from ESPN, regardless of the order from headquarters? Chen: Actually, it depends on our ad sales. If they are ads for ourselves, we can cover the cost. We could choose the programs by ourselves when we could cover all of the cost. Oba: If an advertiser wants Asian programming, you cannot replace the programming by yourself. You have to meet the advertiser’s demand. Chen: Right. Oba: MTV usually has very high freedom to decide programming themselves. Chen: They produce programs by themselves here, because the programming cost is very low. But, it’s very expensive for sports.

328 Oba: You are a joint venture between ESPN and STAR TV. How do you think the ownership pattern affect your programming? Chen: I think they have no influence. We have two channels. Both are supported by the senior management group, which came from ESPN STAR Sports. When all of them agree the programming, then we will go ahead. I know the approval process takes a long time. Maybe, it’s the joint venture problem, but I don’t understand what’s the difference. Oba: I asked the question, because ESPN is a worldwide network, but STAR TV is very Asian specific network. So, I wonder if there is some difference between them in terms of the expectation of programming. Chen: I don’t think they have any argument for that. They just care about profit and loss. STAR, News Corp., or ESPN just want profits. I don’t think there will be a problem. Oba: Do you mean they don’t have any difference in terms of programming preference? Chen: Right. Oba: What is the most significant factor when you decide content in this market? Chen: Relevancy is very important. For example, it is national Taiwan teams, Taiwanese players, or Taiwanese preference. It’s a very important factor for our choice. And, time scheduling is important. If a game is played in prime time, for example in Japan or in Asia, it will be much better than a game in the U.S., because if it is in the U.S. or Europe, the time will be in the morning or in the midnight at Taiwan time. But, if the game is held in Asia, it will be on our prime time. We have two factors. Oba: Do you mean sports games should be live? Chen: Yes, of course. Live is a very important thing. People don’t like the game, which they know the result.

329 APPENDIX N INTERVIEW WITH ESPN ASIA

August 29, 2006

Oba: I understand ESPN has many country-specific programming feeds in Asia like ESPN India, ESPN Hong Kong, or ESPN Taiwan. Where are they programmed and scheduled? Wilkinson: In pretty much every market, we have two networks. As you know, we are a joint venture at ESPN and STAR Sports. Both ESPN and STAR Sports for each market are scheduled and programmed from here and are broadcast from here as well. Oba: So, is it uplinked here to each market? Wilkinson: Yes, the uplink is on the roof of this building. Oba: What ESPN programming feed is dedicated to the Singaporean market? Wilkinson: In this Singapore market, the channel is called ESPN Asia. But, that’s how we refer to it internally. In any listing magazines or any external magazine, it will be referred to as ESPN. Oba: What countries and territories does ESPN Asia also cover other than Singapore? Wilkinson: All the major markets it covers other than Singapore are Thailand, Malaysia, Indonesia, and Vietnam. Those are the primary markets. And, it’s also in Laos and Cambodia. Oba: Why do you provide the same programming feed for those multiple markets, which may have different preferences for sports programming? For example, Thai people and Singaporeans may have different preference for sports programming. Wilkinson: I think there is some local difference for sports programming. I think by and large ESPN carries a lot of football programming, and that resonates throughout Southeast Asia. The interest in Malaysia or Indonesia for the Premier League or any other football, if you look at ratings across the market, tends to be pretty similar. Oba: I heard during the interview with the programming manager at ESPN Taiwan that on non-primetime, Asian ESPNs including ESPN Asia or ESPN Taiwan basically provide the same programming at the same time. Is that true? Wilkinson: I am not familiar enough with the Taiwanese beam, but they are separate beams. ESPN Asia is not available in Taiwan. It’s in English. We are not sending two channels into the Taiwan market. Oba: I am asking about programming. Do they offer the same programming? Wilkinson: It’s immaterial. The two channels aren’t offered in the same market. Oba: What do you mean by two channels? Wilkinson: We have a separate Taiwanese feed. So, just because ESPN Taiwan and ESPN Asia have the same programming, it’s not for any particular reason. We’re simply speaking that only one ESPN feed is available in Taiwan. Oba: My question again is why you offer the same sports programming to various Asian countries where the taste for sports varies. Wilkinson: If you are looking at Taiwan, there’s also maybe football on the Taiwanese network. But, it’s not promoted in the same way. It is not reported in the same way in the news. There is no support programming around it. So,

330 whilst it may be on the network, it’s not treated in the same way. I don’t think that there is an example in Taiwan which programming content of local relevance and interest is preempted by international content, which a baseball game isn’t scheduled so that a soccer game can be scheduled. I think they both get scheduled. My guess is soccer is scheduled like four in the morning or two in the morning. So, it’s on the network, but is it on the prime time? The answer is maybe one night a week. I think you need to look at program two networks 24 hours a day and 365 days a year. It’s huge amounts like 8,000 hours a year. You need some max. But then, don’t focus on that. Go and look at the content that you actually scheduled in the prime time. Oba: Is ESPN Asia offered in English? Wilkinson: ESPN Asia really is exclusively in English. ESPN Taiwan is majority Mandarin during prime time. Oba: Do you have any language customization including subtitles, dubbing, or local language commentary for the markets of Thailand, Malaysia, or Indonesia? Wilkinson: No, we’re in English. We don’t find that to be an issue really in any of our markets particularly. I think in Thailand market, it might be a slightly bigger issue. But in Malaysia and Indonesia, the typical viewer of our network is an English-speaking viewer, particularly in Malaysia. We’re exclusive from the Astro platform in Malaysia, and the makeup of their audience is very much an English-speaking audience. Oba: Do you mean language customization is not so big issue for yourself? Wilkinson: We would love to be able to do it, but we don’t do it. We don’t find that it’s a huge issue for us. Oba: What percentage of ESPN Asia’s programming is not produced here in Singapore? What percentage is coming from other ESPNs or other countries? Wilkinson: Off the top of my head, I don’t know. We have an output deal with ESPN International. We’re 50% owned by ESPN. They’re a syndication company. We have an output deal with them each year where we buy a fixed amount of hours that are at a fixed price. The majority of our programming does not come from ESPN International. There is a reasonably sized output-deal with ESPN International. But if you look at the majority of the hours on our network, it’s made up of football content that we buy from the Premier League or from the UEFA (Union of European Football Associations) or golf content that we buy from Augusta Masters. The majority of ours did not come from ESPN. Oba: Can you tell me more detail about the output-deal with ESPN International? Wilkinson: An output-deal is an agreement whereby we nominate. We have an arrangement, which says we will buy an agreed amount of hours at an agreed price per hour from a catalogue of programming. That’s essentially what an output agreement is. We may nominate, for example, the deal is 100 hours. You would send stuff here. We agree to buy 100 hours from you at $100 per hour. Then as you go, you look in the catalogue and agree which hours actually make up the 100 hours. And, that will vary by market. Sometime we’ll buy hours specifically for Taiwan or that resonate better in India, for example. Oba: Can you choose whatever you like?

331 Wilkinson: Yes, we get first pick. And, as ESPN is a joint venture, we get to look at. If we don’t buy the hours, then ESPN will go and sell the hours to anyone they choose. Oba: It’s a kind of content supply contract. Wilkinson: Exactly. It’s a content supply. It’s an arm’s length deal. It’s done on strictly commercial terms. Oba: Please let me ask you something about localization. It seems that every global TV network these days cares localization. What is your definition of localization for ESPN Asia? Wilkinson: It would be local language commentary and possibly local language graphics. It just depends. Very much you have to look at the source of the supply. Sometimes we cannot access the content without graphics. It is coming in with graphics. So then, you have a choice. Do you want to, in Taiwan for example, overlay Chinese language and graphics over existing graphic packages? If it’s cleaned of graphic, and you want to localize, then we might do it with graphics. But, really the definition is I would say all of our localization would be commentary. Some of that would be Chinese language graphics as well. Oba: So, in your idea, localization is very much related to languages. What about the relationship between localization and very specific local needs, because sometimes your programming may have to reflect local needs in order to do localization. Each market has very specific preferences for sports programming like Indians may prefer cricket, and Taiwanese like baseball. They are totally different. What’s the relationship between such preference for sports programming and the localization? Wilkinson: In India, basically our programming is in English. We do some cricket and some football in Hindi. In Taiwan, most of our primetime hours, which would include baseball and basketball, would be in Chinese. I’m not sure what else. There’s local language content in India. And, for the sport programming, we do a new show in Hindi. In Taiwan, we do a new show in Chinese. We do “Baseball Tonight” in Taiwan. And so, some sport programming is done in local languages as well. Oba: Do you think it’s a kind of localization to take into account very specific preference in each market? Wilkinson: I think broadly localization takes the form of commentary, and I would say that is the biggest spectrum in terms of ours. There were some programs that were created specifically for local markets, for example, Taiwan-specific “Sport Center” and India-specific Sport Center. India has some cricket shows, which are specifically produced for India. Taiwan has a baseball show that is specifically produced for Taiwan. Oba: Sports Center is very famous programming in the States, and you produce the local version of Sports Center for each market. Why don’t you just put U.S. Sports Center but produce your original Sports Center for Asian viewers? Wilkinson: We have a rights issue down there. ESPN’s domestic Sports Center isn’t available for us in Asia. Oba: Sports-i ESPN offers the same version of Sports Center in Japan with dubbing into Japanese.

332 Wilkinson: That may be the case. This joint venture does not operate in Japan, so I simply do not know what happens in Japan. If ESPN in Japan is airing Sports Center, then I presume it has the rights to do so. We looked at it here for Asia. We were unable to do it, probably due to the rights. Oba: So, it’s just because of rights issue, not because of whether or not local people like that. Wilkinson: It’s not so much of a content issue. It’s primarily only a rights issue. Oba: ESPN Taiwan and Sports-i ESPN said their domestic viewers usually don’t like foreign sports games or foreign sports programs, which don’t include their domestic athletes. How about the situation in Singapore? Wilkinson: I would say it’s completely different in Singapore. If you look at the top rating sport shows on ESPN here in Singapore, they’re all English football matches featuring no Singaporean. I think the interest in Southeast Asia is for the best rather than necessarily local. If football is the number one sport, which it is rating wise, then people want to watch the best football. There is certainly some interesting local football. We carry a package of games from AFC, the Asian Football Confederation. We produce a weekly show featuring local league football, but it doesn’t rate as well as the Premier League does. Oba: You mean soccer by football, right? Wilkinson: Yes. When I say football, I mean soccer. Oba: So, soccer is the most popular sport in Singapore. Do they have any professional soccer league here? Wilkinson: Yes, it’s called the “S League.” I guess it’s probably semi-pro. I don’t know if people playing in the local teams do that for their jobs or not. My guess is they have other ways of earning income as well. Oba: Do Singaporean viewers usually care about whether the soccer game is from England, from Serie A, or somewhere? Wilkinson: There is a huge difference. [From the top] English football, Spanish football, Italian football, German football, and everything else. Oba: Are you talking about popularity or quality? Wilkinson: I’m talking about popularity. If you’re looking at ratings, English football is a standout and a long way above any other football that we carry. Oba: Why do they prefer English football rather than Italian or Spanish football? Wilkinson: Brand and time in the market. English teams for a long time have come out to Asia in the summer months to tour and play local games. I’m guessing that the networks in Asia have carried English football longer than they carried Spanish or Italian football. There would have been a big upsurge in Spanish football three years ago when David Beckham went to play at Real Madrid. But, by and large, I think it’s because of the amount of time that English teams spent touring in Asia in the summer months, and the amount of time that the English football has been shown on local networks. It’s first mover advantage. Oba: Does the English Premier League have any Singaporean players now? Wilkinson: Not that I am aware of. There are Asian players in the Premier League. There are Chinese players and Korean players. Most of those would be Korean players. I think there was a Singapore referee. There was a referee at the World Cup from Singapore, and then he became bit of a local celebrity. But, as far as I know, there are no Singaporean players in the Premier League.

333 Oba: Singaporean viewers don’t care if the Premier League includes any domestic players or not. I heard that Japanese viewers very much care about that, though Wilkinson: To generalize, I think it’s a North Asian thing. Taiwan cares about Taiwan. Korea is interested in the performance of Korean players in the Premier League and would be interested in the performance of the Korean team in the World Cup. I am not sure that there’s much ground, but it’s a lot of interest. And as for Japan, obviously you’re in a far better place to comment on that than I am, but I would guess it was the same. Oba: Do you think some ESPN sports programming in general have universal appeal, which could be accepted worldwide? Wilkinson: As a news brand, yes. Sports Center. I think sports news resonates throughout the world. I think probably only soccer is a sport that resonates everywhere around the world. Even in the United States, I would argue it has resonance. ESPN too has built a lot of their business around soccer. They’ve had ABC, which carried the World Cup for a number of years. ABC/ESPN just had a very big license fee for two World Cups. Whereas back in 1994 when the World Cup was in the States, it wasn’t actually borrowing time on the network’s today’s game. It’s changed dramatically. And, I think if you look at the progress of football in America and the recent performance of the American team, it’s due to college and high school participation in the sport. But, it’s regionalized. It’s Los Angeles with the Mexican population. It’s Florida, as you know, with big South American population. I used to work at Fox in the U.S., so I did a little work on it. So, I would say soccer is probably the only true global sport. Obviously, there are events like the Olympics that have global resonance, but it’s an event. Oba: In general, do you think sports programming is able to go across national boundaries more easily compared to other types of programming? Of course, the Olympic can do that. Wilkinson: Yes, I think it’s multi-territory rather than global sport. I think football probably resonates in most markets; cricket, only in some markets; NFL, relatively few markets; baseball, in Japan, Taiwan, and the U.S., but does it resonate in Europe? Not really. I think possibly extreme programming, skateboarding, motocross, or “X-Games” type of product, might resonate, but that’s more perhaps sort of cultural phenomenon than a sporting phenomenon. I would say that there is a kind of programs might well resonate in multiple markets. I guess golf resonates in a lot of markets. Tennis maybe, but I would say golf and football, soccer, are extreme programming would resonate in most amount of markets. Oba: It’s interesting that each sport has territory in the world. How do you think each sport has established the territory? For example, why baseball is popular among the U.S., some East Asian country, and some Latin countries but not in Europe? I think cricket is popular only in India and its neighboring countries besides England. Wilkinson: I think cricket is definitely about colonization. The countries where cricket is big all used to be territories that belonged to Britain: India, Pakistan, which itself was split off from India in the 50s, South Africa, Australia, and New Zealand.

334 Oba: So, it has something to do with colonization. What do you think about baseball? Wilkinson: I don’t know. I’ve always assumed that the interest for baseball in Japan was based on the U.S. presence in Japan after the Second World War. If baseball was played in Japan prior to the Second World War, I don’t know. Likewise, I’m assuming that there is interest in those products like baseball and basketball in Taiwan, China, and Japan, and I don’t think it’s a coincidence in its proximity to the U.S. I’m guessing it’s an immigration thing going on there from Japanese to the West Coast of America and come back. I’m guessing that’s what it is about. And frankly, if you see the U.S. presence in Japan after the Second World War, that may be your answer. Now, I don’t know the reason baseball and basketball haven’t taken root in Europe, despite the fact that there was a lot of American presence in Europe. I mean it wasn’t quite the same presence. Football was obviously a very established game in Europe, even at the end of the 19th century. What I think interesting is places like the Caribbean, which traditionally were English colonies and football playing places, are now much greater American influence. You’d probably find a lot of people playing basketball now and not so much cricket. Oba: Do you mean the countries where American sports are very popular are also influenced by the U.S. culture? Wilkins: I would guess. I think if you look at the Caribbean, that’s’ almost certainly true. If you look at proximity to America, I’m guessing North Asia as well. Oba: So, the preference for sports has something to do with… Wilkinson: Cultural and historical reasons, I think. Oba: And so, what is important is which country imported a certain sport to that market. Wilkinson: And, I think tastes change in markets as well. I don’t think that the taste is static. If you look at the growth of football in India, which we don’t think would be, I think what happens with sports is a kind of interest around huge events, the World Cup, for example. And then, depending perhaps on success, that interest then spreads out. So, it peaks around the World Cup, but there’s interest leading up to the World Cup and leading out of the World Cup. Oba: Please let me ask you something about brand. How is the ESPN brand perceived by Asian viewers generally and specifically by Singapore viewers? What is the brand image they have towards ESPN? Wilkinson: We differentiate our brands ESPN compared to STAR Sports. Both of them are authoritative forces of sport. The question is the delivery. I think the delivery for ESPN is more formal and more traditional in a sports TV sense. So, you get guys sitting behind desks, probably wearing a tie, and talking about a soccer match. If you look at the way we treat soccer on STAR Sports, it’s still very knowledgeable and still the best journalist, but the delivery is perhaps more relaxed setting. You and me are talking with no ties on a couch. STAR Sports aims to be more youth’s viewing. Oba: It’s more like entertainment. Wilkinson: Yes, exactly. If you are looking for analysis, you might get it over ESPN. If you are looking for behind the scenes chats or look at a more casual delivery of the same information, you look into STAR Sports. I mean in both cases we see ourselves as authoritative voices in sports. It’s about the delivery rather than the content.

335 Oba: I didn’t know the difference between both channels clearly. Wilkinson: What we’ve involved in as a project really since about February is ongoing. It is to differentiate clearly by content and by delivery. So, Wimbledon is on STAR Sports. STAR Sports is known for Formula One motor racing. ESPN is known more for its football. Yet, STAR Sports has football as well. So, if you look at the football as being on both networks, then on ESPN its delivery is, as I say, more formal. It has a more formal style of delivery. STAR Sports has more casual style of delivery. Oba: Going back to the brand issue, is it common for Asian viewers to perceive ESPN as an international or global channel? Are they usually associating ESPN with something international or global? Wilkinson: I think that ESPN is also authoritative. No, to be honest, I don’t know the answer to the question. Oba: Do you think it’s important for you to maintain international or global image? Wilkinson: I think ESPN prides itself on having the resource of a number of sources around the world. It prides itself on having the best of everything. So, if you want basketball and NBA news, come to ESPN. I believe that people watch ESPN, because it’s ESPN. In that sense, I think people watch to consume their TV in a little more local level. They don’t necessarily watch it, because it is the Sports Center in America. Oba: ESPN Asia is the Asian headquarters for ESPN, isn’t it? Wilkinson: This is very much a JV. On the surface level, I believe you’re absolutely right, but ESPN is only half of this company. Oba: I think you are supposed to play a kind of role as an intermediary between ESPN International and local affiliates like ESPN Taiwan in the Asian market. Is that correct? Wilkinson: They are ESPN STAR Sports. They’re not affiliates. It’s not like a broadcast market in the U.S. Taiwan isn’t an affiliate. An affiliate implies it has choice, right? The affiliate implies contracts, right? This is absolutely no. ESPN Taiwan is owned by this company. It’s the local delivery of this company. It’s an O&O if you are looking for more U.S.-centric term. The channel is owned and programmed by this company. It is a local channel but not an affiliate. The difference is Taiwan is a specific market, so distribution and ad sales are handled locally. The same is China, India, and then the rest of Southeast Asia. Oba: Do you think ESPN Asia has much autonomy or freedom when you decide programming independent from ESPN International? Wilkinson: ESPN International is a syndication business. They’re selling programming. ESPN International or ESPN also owned half of this business. We have a board that is half made up of ESPN and half made up of STAR Sports. We report to the board. The board is independent. And, what is done is to advise on the interest of both companies. They add value in terms of STAR operating with these markets, and ESPN operates in these markets as well. So, the board’s role I guess is both advisory and regulatory. It has autonomy for joint venture. It works remarkably well, but it’s made up of two parties for working what’s ahead of it. It does work very well if the partner seems to have the same interests in growing their business. So as a rule, I am not aware of any tensions. Yes, it’s autonomy.

336 Oba: What relationship do you have with ESPN? ESPN is obviously your parent company, holding 50% of stock. What is the ownership pattern reflected in your programming? Wilkinson: ESPN STAR Sports operates as a joint venture. Its role is to create value in those sports channels under the two brands here in Asia. As ESPN owns half the company, they take half the profits. That’s the kind of work their role is. So, ESPN have 50% of the decision-making capability. Both EPSN and STAR have other interests within this market. Within Asia, maybe STAR’s interests are a product that would be to generate and take in some movies and documentary. And, ESPN is all about syndication. Oba: What happens if ESPN U.S. tries to promote some sports programming on a global basis, and you think it may be unsuitable for Asian viewers? Can you say no to them? Wilkinson: Absolutely. Oba: They are a parent company, though. Wilkinson: Not one parent. I don’t think there is a problem. You could say that absolutely, because maybe the other parent would say no as well. You could, whenever we acquire programming from either party. STAR through it’s relation, through it’s services, and through News Corp has relationship with Fox Sports International, which themselves are a syndication business. If I buy a program from Fox Sports International, I have to declare that to the board. If I buy a show from ESPN International, we have to declare that to the board. Oba: Can you also get some sports programming from Fox Sports? Wilkinson: I mean in theory there is nothing to prevent us from doing so. ESPN is a sports brand in this market. Fox Sports isn’t. In the Middle East, it is. There’s a Fox Sports channel in the Middle East. Fox Sports operates a business in the Middle East, and so does ESPN outside this joint venture. Do we know the people there? Yes, of course. Do we have relationships with them? Yes, we do. But then, we do with all any number of sports broadcasters. Oba: What’s advantage to be a global TV networks like ESPN? Wilkinson: I think that would be brands and access to content. I think they help. There is sharing of resources and ideas. As I would speak to programming people at ESPN in New York, I was able to Fox’s programming guys in Australia. I think the key advantage is in ESPN and STAR for that matter. You’ve got two companies who are interested in growing their own channels in the Asian market. They have been here a long time and want to stay for a long time. And so, it provides stability in funding. Oba: What do you mean by resources? Is that personnel resource, content resource, or financial resource? Wilkinson: Financial resource and content resource. We share news gathering services. We share programming ideas. We don’t operate in any way with other broadcasters, because everyone has their own agenda and their own needs. But, if you wanted to get a feel for who can be selling the Spanish League internationally, I might pick up the phone to my colleagues in Europe and ask them if they know the answer to that question. We access a lot material from B Sky B in the U.K., which is a 36% News Corp company. But, that again is not connected that they provide us with content. They provide us with packages of programming like “Goals” package, for example, news

337 clips. That again is at an arms length relationship. So, I guess it’s like any family network you are closer to, and so you know that someone’s always got something to add to you in terms of experience or knowledge. One of the guys on our ESPN board used to have this job here and used to have programming here. He now works for ESPN in New York and sits on our board. Another one of our board members is the head of acquisitions for ESPN in the Americas. So, if you want to talk about your acquisition or see some ideas on how you might deploy content, we’re equally on the STAR side, on the News Corp side, and on the ESPN side. There is no restriction. Oba: What are your responses when there is some conflict between STAR Sports and ESPN in terms of programming. Fox may say, “Oh, it is good for this market,” but ESPN may say “Oh it’s not.” Then, what’s your response in this case? Wilkinson: To be honest, I’ve never seen that. I’d be very surprised if there was a kind of that one part of the board saying absolutely it doesn’t work, and the other half saying absolutely it does. You might have to use on relevance, interest, long-term security, or whatever, but I am not aware of there having been a conflict like that. Oba: But, I think News Corporation and ESPN or Disney have somewhat different policy in terms of programming. Wilkinson: That may be true on the movie side, but it’s sport. There isn’t really such a disagreement. We’re positioning also based on content rather than necessarily based on which package of movies we have. I accept that in the documentary space or the music space that may well be different. STAR Movies is different from the Disney Movie Channel. That’s going to be positioned differently, but in this business area, it’s not really like that. Don’t forget that the underlying interest or the underlying cost of this business is its sports rights. We’re not really buying sports rights from our parent companies. Sometimes we do, but the output deals, which I referred, is a very small part of our business. We’re buying rights from third parties. So, it’s not like we’re saying this package of movies owned by Disney is better than this package of movies owned by Fox. You can see the conflict, and frankly people went to HBO or Cinemax. I know that their initiative is studio initiative, and there is conflict, of course. But, in this market, we’re, by and large, buying content from third parties. So, the problem doesn’t seem to exist. Oba: As for sports broadcasting rights, I understand ESPN STAR Sports makes their local channels like ESPN Taiwan or ESPN India to make investment in and contribute to the acquisition of broadcasting rights of sporting events. Is that correct? Wilkinson: No, it doesn’t really work like that. Oba: So, you will never rush local channels to make some contribution to get some sporting rights for the whole Asian markets. Wilkinson: I mean you might allocate costs to them, but you’re not asking them to pay for them. You’re not asking them to put their hands in their pockets and pay for rights, because all the rights are owned by the company. ESPN Taiwan doesn’t exist as an affiliate in the way that you might be thinking. It is a channel. It’s that where you might say, “OK, we bought the Premier League,” assuming that most of the costs for the Premier League set to go to

338 Southeast Asia and a tiny amount to go to Taiwan. But, that’s on allocation basis. It’s not a question of paying for the rights. Oba: However, when you purchase the broadcasting rights for Major League Baseball, each of the local channels will have to share the purchasing cost. Wilkinson: It’s an allocation. No one is going to ESPN Taiwan and saying, “How much are you prepared to put in for this program?” Likewise, no one is going to STAR Sports Taiwan and saying how much it pays. You are looking at it as the whole. We’re buying for all these markets. What we do is we say, “Look, is there any interest for this property in Taiwan? No, not really. OK, let’s not buy Taiwanese rights.” Taiwan is allocated some of the costs and allocated the revenue as well. We write revenue both on a regional and sub-regional level. So, Taiwan would be allocated a piece of the regional money as well. Oba: What are your criteria when you choose content for Asian markets? Wilkinson: Ultimately, cost and revenue. There are some properties we would expect to make money on, and some properties we would expect to lose a bit of money on but good for the prestige. And, some properties would be in the balance. But, the finances are only one part of decision-making process. You are looking at it strategically, perhaps. You’re looking at growth. You’re looking at rating. You are looking at content. You make decisions based on a number of different ways of looking at sales. But primarily, it’s about service to the consumer. Is the viewer interested in our programming? I guess that’s probably the number one criteria. Sure, you’re providing a TV service. And then, people would watch our networks, affiliates want our channel, and advertisers want our channel. Not every decision is made that way. But, overall we’re looking at how we offer the best service to our viewers.

339 APPENDIX O INTERVIEW WITH DISCOVERY CHANNEL JAPAN

March 17, 2006

Luff: Discovery operates very much globally. The first thing Discovery does is whatever possible to create programming that will be of interest to most Discovery viewers around the world. There are various offices in major regional centers underneath Discovery Networks International, which look after each of their own regions. Each of those offices actually has the programming department and works very closely together. Sometimes, those offices decide that they will put money in something like “pool funds,” so each of them has their own budget to some extent to do their own programming. For example, Discovery U.S. wants a program to be commissioned or co-produced. It might be a space program about mankind going back into space. All of the international offices agree that that’s a very important program for everyone in the world, including all of their viewers in that region. So, they can put money into that production. In fact, that production is made for every Discovery viewer in the world. We call this a DCI (Discovery Communications Inc) commission. DCI is the parent company that works from the world headquarters in Silver Spring, Mary land, the U.S. When DCI does a commission, it’s on behalf of every region in the world. So, Discovery Japan will automatically get that commission program. Oba: Do you get the commission program for free? Luff: No, we all have budgets we need to contribute. But, it’s quite a complicated process how the money actually flows from Discovery Japan to DCI. The Singapore office is the regional headquarters for Discovery Asia Pacific, and Discovery Japan is actually part of Asia Pacific. We mainly provide money to Discovery Asia-Pacific in Singapore for our programming. At the moment, we don’t have a budget to do local commissions. We don’t do commission that are Japan-only from this office. We pay money to Discovery Asia, and in turn, they are fully responsible for providing us with all of our programming needs. The reason for that is it’s much more cost efficient to do that. It also enables us to have an input into what programs we want the money is used efficiently, because the Singapore office can pool the funds from each of the offices in the region and come up with something that will work for everybody. By actually pooling the funds, they can produce something that’s of higher quality that has appeal to all of the viewers. So, it’s not about just acquiring whatever the U.S. Discovery produces. We have a say about what programs should be produced The Singapore office’s responsibility is to listen to each of the regions and to come up with common things and common program ideas that are relevant to most people in the world. That’s mainly how we operate. We mainly operate as a global company that is looking for issues that affect people in a way that it is common to everyone in the world. Oba: What are issues commonly interesting to people of the world and those particularly to Asian people? Luff: Issues about the environment, engineering development, science and technology are affecting everybody in the world. These are the main sort of

340 big global issues that we address as a company on a global basis. On the other hand, we realize that there are certain topics that are of particular interest only to the Asian region as well. An example of that might be the “tsunamis” that may not be a relevant topic to viewers in Europe or viewers in the U.S. But, as the Asian audience obviously is directly impacted by tsunamis, it’s very much an Asian-Pacific topic, and so the Singapore office may realize tsunamis are very important thing we need to be considering. We will have a discussion about the particular type of program to produce. We will say, “Yes, it’s definitely relevant to the Japanese audience,” so we need to include topics about Japan in that program. So, the program will be about tsunamis generally and will feature countries all around the region that are affected by tsunamis. It will include some Japanese stories as well. So, it’s not solely a Japanese program but will include examples from Japan that are particularly relevant for the Japanese audience. Of course, viewers in Australia and viewers in Singapore are interested in Japanese stories as well. Oba: Are viewers outside Japan interested in Japanese stories? Luff: Japanese topics are interesting to a lot of people in the world. So, what’s really part of our role as a global company is to also take Japanese stories to the rest of the world as well. We bring in foreign stories to the Japanese audience but are also taking Japanese stories to a foreign audience. And so, that’s how we operate globally, sharing ideas and stories. Apart from the big global stories, we also need things that are specific to the Japanese audience. They are topical and relevant to the Japanese audience but may not be relevant to the Australian audience or the U.S. audience. Oba: What are the topics relevant to especially for the Japanese audience except for tsunamis? Luff: An example is engineering design and how engineers in Japan are coming up with new ways to design buildings to reduce the impact of earthquakes. We featured stories on the Roppongi Hills development when it was first built. We are probably doing some stories now, looking at other developments in Tokyo and other parts of Japan. So, anything that’s particularly relevant to our brand, the Discovery brand, is all about enabling our viewers to explore their world and also to satisfy their curiosity. An essential component about brand is giving information that they didn’t know before. So, we are constantly looking for new information, new developments, and new discoveries, not only on a global basis but also within Japan for our own audience. Other things we look at in Japan are developments in the automotive industry. Japan is leading the world at the moment in terms of engineering for motor vehicles. Toyota is in fact the largest motor vehicle company in the world. So, it’s a very important topic not only for the Japanese audience but for the global audience. So, the way we operate is actually kind of a hybrid or mixed model. At any one time, there could be several productions being made in Japan, not necessarily only for Japanese audience for Discovery. For example, Canadian Discovery Channel has their own budget for commissioning programs. They have done many stories in Japan. They came here during the expo at Aichi. They did a whole hour program just on Japan, while they were here. They featured the expo, various developments in computer technology in robotics, and lots of science and technology stories coming out of Japan. Those are the stories that are not

341 only of interest to the Japanese audience but very much of interest to the Canadian viewers of Discovery Channel as well. That program was originally commissioned by Discovery Canada. They made the series. We have access to that program so we can choose to take that program exactly as it was made particularly for Canadian audience, but we can also choose to adapt that program. We can acquire the rights to the program, with the additional rights being able to edit it or to localize it, or to repackage it. A good example is the Canadian series in Canada called “Daily Planet.” It was particularly made for the Canadian audience. It has two Canadian hosts who are traveling the world, looking for stories to bring back to the Canadian viewers of Discovery Channel. What we are doing with that program through our Singapore office is that the office has acquired the rights to that series for the whole of Asia Pacific including Japan. We were particularly interested in that series, because it has many Japanese stories. What the Singapore office is doing is re-versioning or repackaging that whole series by taking segments of stories from the series. They reedited it and made it particularly relevant for the Asia Pacific audience including the Japanese audience. It is being reversion, it is being repackaged, and it is shown on the Discovery channel throughout the whole of Asia Pacific including Japan. The Singapore programming team is looking at that series with a fresh perspective on behalf of all of our viewers in the Asia Pacific region. We will take out anything that is only directly relevant to the Canadian audience. We will also add in things that we want to be relevant to our Japanese audience and to the Asia Pacific audience. Clearly, that costs money. You’ve got the original license fee that we have to pay to Discovery Canada, plus the cost of actually repackaging and re-versioning that series. Oba: Do you have original programming fully produced by Discovery Japan? Luff: We are not doing very much fully original programming that is only made for Japan. We are looking at ways of doing that at the moment, identifying additional funding opportunities to do local production solely for Japan. But, to do that is obviously much more expensive than doing something that will work across the region or can be shared with all of the regions of the world. We have had Japanese productions that have been commissioned or co-produced by Discovery Asia and often with another partner in the world. For example, last year we showed a special program called “Secrets of the Battleship Yamato.” This was a production all about a Japanese ship, the largest battleship ever made. It’s obviously very much of Japanese program, particular interesting to Japanese audience. And so, the challenge for that program was actually to tell the Japanese audience something they didn’t already know. The way that program was financed was Discovery Networks Asia in Singapore co-produced that program with the Public Broadcasting Service (PBS) of the U.S. They have a regular programming block called “NOVA,” specializing in documentary programming, focusing on history or science and technology. They identified this story was very interesting and very important for the U.S. audience as well. PBS put money in together with Discovery Networks Asia, so the producer was able to make that program for two different audiences, actually creating two versions. One version was made predominantly for the Japanese audience, which also worked very well for the rest of Asia on Discovery Channel. But, the U.S.

342 version actually had a different perspective. The story is the same, but it just looked at the story from a different viewpoint. It’s assumed that the U.S. audience didn’t know a lot about this battleship and background, and wasn’t really familiar with what the word “Yamato” means. So, there was a lot of information that had to be explained to the U.S. audience that the Japanese audience would already know. Instead of just doing one program to work for both audiences, the producer decided it was very important to actually have two separate versions. One is very relevant for the Japanese audience, and another one is very relevant for the U.S. audience. It’s very interesting that you can actually do that with one story. It doesn’t mean you change the facts. Obviously, the facts cannot be changed. But, it’s treated from a different perspective. It was during the World War II, and Americans were involved in the war. It looked at particularly from the U.S. side as well. How had the U.S. people felt about that period? That was very balanced reporting, so it wasn’t at all one-sided view. It was very balanced in both versions, but it just approached from a different perspective. So, it’s difficult for me to actually give exact percentages of how we do this, because we are not going to track it that way. Almost everything we offer to our audience in Japan has been considered from the Japanese audience’s perspective, even if it’s a production that’s been made originally for the U.S. audience, or it’s been made for the U.K. or European audience, we will look at that program and decide this is relevant to our Japanese audience. Does it have topics that are of global interest including the Japanese? Or, does it have topics that are particularly relevant only for the Japanese audience? Does it feature local topics? I can say that none of the programs that we show to our audience is not relevant to our audience. We look at everything that’s being offered to us and have a say just about everything. We are very fortunate that the programming team in Singapore who looks after the region makes out a large team, and there are people who are dedicated to the Japanese business and are constantly in contact with us everyday. They are very aware of what our requirements are and major topics that are of interest to our viewers. We give them a lot of customer feedback, and in turn the Singapore office works very closely with the U.S. office and the other international offices to say, “Tokyo is really looking for stories about science, developments in genetics, DNA research, and DNA mapping.” There seems to be an increase of interest in this area. We also find that the rest of the region like Australia is really interested in this area. The Singaporeans are really interested. The Chinese are really interested. Europe then says, “That’s good, because we are finding the same thing.” The people in Europe are now saying they want to know more about this sort of area. And so, we can actually come to the conclusion that this is a topic that is a particular interest to various regions of the world. Americans were not really interested in this area. So, they are not going to be doing topic about this. There are cases where you will have various regions excluding the U.S. get together to produce a series that have particular interest to their regions but not of any interest to Americans. I think the international business has a different focus in many respects from the U.S. business. The U.S. is such a large country and has such a large diversity of population and of cultures of geographical regions that there are lots of

343 stories in the U.S. that are particular interest to U.S. viewers. I think probably the U.S. viewers are less interested in international topics. Oba: Do you mean viewers in other countries are more interested in international topics in comparison to their American counterparts? Luff: I think an Australian audience from my experience is much more interested in stories from Europe, from Asia, and from Japan, than may be the U.S. viewer. That influences the decision making about what programs are produced and what countries will show those programs as well. There is a kind of constant dialogue about what is particular interest of which region on which country. One thing we have just done recently is actually a hire of our own general programming manager just for Japan, and we have identified that our business is now at a level that we would like to identify opportunities to start commissioning and acquiring programs particularly for Japanese audience that may not be of interest to anyone else in the region or in the rest of the world. What would happen is that our programmer identifies a topic for program that he knows will be of real interest to the Japanese audience. It’s also quite often the case that you will have two very different countries with very different audiences interested in the same topic for various reasons. Oba: What’s the topic, which viewers in two different countries are interested in? Luff: We might decide to make some programs about marine world for our Japanese audience. I would not be surprised if the Australian office says, “Our audience is very interested in this as well.” That is probably because Australia is an Island just like Japan is. We are very much influenced by the oceans around us, so the marine world is of particular interest to both countries. We may actually pull funds to have the rights for both of those countries. But, ultimately it’s kind of an economic equation. The question is whether the Australian market is big enough to justify putting money into a production that may only be seen by the Japanese and the Australian audience. Sometimes the answer would be “yes,” and sometimes it would be “no”. We may decide the answer is “yes” but think we should wait until another topic that we have identified. So, it’s all of question of balancing our interest and our finances and making sure that we use our money wisely and most efficiently across all of our businesses. Ultimately, Discovery Japan does not have its own budgets to do Japan-only productions or commissions, but we can speak with the Singapore office and globally about creating more Japanese stories or identifying stories that are of particular interest to our Japanese audience. Oba: Do the Discovery Channel in Singapore and the Discovery Channel in Japan have the totally same programming format? Luff: No. Actually the Singapore office looks after the whole Asia Pacific region. Singapore is also the regional operations center. So, we physically create all of the channels for the whole region in Singapore from our single production and distribution center. There is actually a dedicated feed for Discovery Channel Japan, Animal Planet, and Discovery HDTV for Japan. They are all created in Singapore and then beamed out by satellite and then set down by cable systems here in Japan. So, it’s a bit like the way the actual schedule and the actual grid, what programs are shown on what particular nights and what particular times, is designed. We try and come up with a common

344 format that would work for the whole region for various reasons. One is brand consistency. People are becoming much more mobile, and someone, for example, a Japanese person, goes to Singapore and he or she sits down and watches Discovery Channel in Singapore. We like them to feel like they are watching the same brand, even though the programs may be different and the schedules may be different. So, as much as possible, we like to link the schedules and keep the grid for the whole region as close as possible. The other reason is for advertising. We do quite a lot of regional advertising, and Singapore is actually a set up for regional advertising. A lot of agencies and clients based in Singapore want to advertise across the region. They are often looking for a solution that is consistent across the whole region. They want media that will work for them across Asia Pacific. And so, if we actually change our grid or our format significantly, it just offers some problems for our regional advertisers. We have to customize it further and further for them. They generally prefer not to have that level of complication. They like to have a solution for their advertiser requirement: that’s very simple, very easy to measure, and very consistent. So, we have to balance the interest of keeping a unified brands and keeping our regional advertisers happy. On the other hand, we also need to satisfy our local needs. For example, we have identified aggressive animal programming like really wild programming of predators in the rest of the region. It may be identified that most of Asia Pacific like to watch that sort of programming, and it’s really popular, and so it would be scheduled at prime time. However, in Japan, we may decide that most of our viewers really are not interested in watching the programming in the prime time. They want to see programming that the whole family can watch together, and potentially children should not be watching that sort of programming before they go to bed. We may actually move that sort of programming into a late night timetable. So, we may be different from the rest of the region where they have 8 o’clock wildlife predators. But, in Japan, it’s not shown until 11 o’clock or even midnight. So, there is some room for change. So, we change our grid from the rest of the region for editorial needs, from what the audience is looking for, and from feedback we get from our audience. We also sometimes change it from the rest of the region for our own advertising requirements. Often we work with local advertisers in Japan. They want to advertise only to a Japanese audience. We can offer them programming schedules to fit with their own brands, and also we can create special programming for them to send a particular message for their audience. We may actually change what the rest of the region is doing and have something different for our own advertisers. We can work with our advertising partners to create an environment that is going to be relevant to message they trying to deliver to their customers as well. Oba: You refer to some dissimilarity between Japan and other Asian countries. At the same time, do you also think Asian viewers share something common in terms of expectation for documentary programming? Luff: I think generally documentary programming or factual programming can be across a very wide range of topics. Discovery channel is particular about science and technology, engineering, history, world culture, and human adventure. There are these lots of topics we focus on. But, what our audience requires from us is and what we continually try to offer them is a level of

345 quality in terms of the production: very high production values, cleaver editing, new camera techniques, etc. I mean a quality production or technical quality but also quality in terms of providing information that is not generally known. So, really our specialty is gaining access to stories, to people, and to facts that are generally not known. That’s part of our brand, the word “Discovery.” It’s all about telling me something that I didn’t know before. And so, audience’s expectation about our brand particularly is “You are a documentary channel or factual entertainment channel so I expect certain types of stories, but, on top of that, you really have to tell me something I didn’t know before.” So, that’s where we would differ from other documentary channels. Not just to show beautiful pictures or have a very high technique of production, but the actual topic itself needs to be generally not really well known or go a further step to what’s been done before. There is certain topic that the Japanese audience is interested in. Egypt for many years was very a lot of interest. The Titanic or major engineering stories are of a lot of interest. But, as other networks and other channels cover similar stories, our challenge is always to find additional information. If we are going to do another Titanic story, it has to be very different from every other Titanic story ever told. In the past, we have worked very closely with James Cameron, the Hollywood producer. He has a lot of technology that’s allowed us to go further explore more, look at more detail, and discover more facts that were just not known before. So, we will only able to do another Titanic story if there is a completely new angle what we can expose to our audience. There is no point in doing the same story over. It always has to be a fresh respective. Otherwise, our audience will be very disappointed. Oba: What type of programming is considered to be universally appearing and accepted by audience worldwide but not necessarily supported by Japanese viewers? Luff: That’s a very good question. I think as a general statement the Japanese audience is interested in very inspiring and positive stories that reinforce the fact that the world is constantly improving. Now, in comparison, there are some countries where Discovery Channel viewers are demanding of more of what I would call the “underbelly stories” like “Please tell that there is a problem. I really need to know that there is a problem.” I think the U.K. audience, for example, is actually more interested in this sort of semi-stories and in sort of darker stories. So, Europe or the U.K. may do stories that reveal problems and issues, for example, getting really inside what Saddam Hussein did to his country. I mean some terrible stories about what was done under his leadership, not always positive. There is not always a positive outcome in the fact that he was actually captured in his own trial. To do that story, a lot of that atrocity and a lot of that horrible torture have to be shown. The European audience demanding that to be included to have really balanced view of that sort of story requires the channel to show exactly what went on. Of course, there is a lot of footage available that shows exactly what was done. I mean it’s horrible footage. It’s neither enjoyable nor entertaining. But, I think as a current affair story or as a documentary treatment the European audience would be very demanding that all be included. From my experience so far, that sort of story is not so popular in

346 Japan. The audience doesn’t seem to react positively to those sorts of stories. It might be a cultural thing where day-to-day life may be a bit harder here, particularly in Tokyo, a huge and very urban city. There is a lot of stress just in day-to-day life. When people get home and watch television, they want to relax and be entertained and uplifted. They are not necessarily looking for hardcore current affair stories. As a general statement, Japanese terrestrial television focuses very much on light entertainment, variety, and fun. It’s an escape from the hard life that people have experienced during the day. And, the people seemed to be less interested in hard core typical issues. The other thing I just want to add is that, like everywhere, I suppose the Japanese audience is less interested in watching programs that are from some other country’s perspective. For example, if the U.S. Discovery were to come here and do a story for the U.S. audience, it probably wouldn’t be of interest to our Japanese audience, because it’s assuming of very basic level of knowledge about Japan. It would be telling stories that the Japanese audience would not be interested. They already know a lot about that. So, we would tend to avoid that sort of programming, because it’s not designed for a Japanese audience. It’s telling a story from a different perspective. It may be interesting to somebody else but not interesting to us here in Japan. Oba: Do you think a documentary film in general is more easily understood or accepted by various parts of the world in comparison with other program types like music programming or sport programming? Luff: It’s a hard question. I think some genres of programming need to be much more culturally relevant to a particular market. Documentary programming particularly for Discovery Channel can be more global in focus. For the reasons as I mentioned earlier, we focus on global topics that affect everybody, regional topics that affect particular region, and then very local topics for things that are very topical in particular country. I think documentary programming lays itself being much more globally and regionally focused, than lifestyle programs or even music video programs or even news. News often needs to be very locally focused. We have that sort of luxury in a way that we can operate much more globally as a program producer. Obviously, we still need to do local productions and we are very aware of that local audience, but they are less concerned about being Japan focused. I think our audience is much more outwardly focused. When I watch other channels here in Japan, I find that the music video channels and the news channels are very focused on Japan. I think there are cultural and political reasons for that. The channel brands themselves were even very locally focused. For example, even MTV from what I see does a lot of Japanese programming although there is also a huge mix of U.S. music. MTV programming is very different from us. They do a lot more local production, and I think that’s a cultural thing. Their audience is younger, and they arrange some music and youth issues. Those sorts of issues are very much Japanese focused. I also think their business model generates lot of advertising revenue from doing local events and local productions. The music generally allows you to do that a lot more than a documentary. Documentary programming really does need to be dealing with in-depth issues and also provide very balanced coverage. Our brand does not really allow us to change our focus in that programming for the benefit of an

347 advertiser. I think the MTV brand is much more open to doing that, actually changing what they are doing for the benefit of an advertiser. We have a different focus than what some of those other brands do. Oba: Can you specifically characterize the target audience of Discovery Japan in this market? Luff: Particularly in Japan, we are very fortunate that the brand that we have internationally suits really well with the Japanese audience. We target people who are really curious regardless of a level of education or financial status. But, we find much of our audience does have a very good education and generally is so curious to know more their own lives. They have many opportunities to further their education to get jobs and are quite successful and have quite good income as well. In Japan, the standard of living is generally very high, the average income is very high, and many of our audience actually have a high education. Most of them probably at least have one university degree, if not two. And, many of our viewers hold very senior positions in companies and therefore are very influential in their careers, so we particularly enjoy having them as our viewers, because they constantly demand a level of information and a level of quality that we are really comfortable with. We like to be pushed in that way. We like our audience to be satisfied with what we have delivered them. As a general rule, we target men and women between 25 and 54 as sort of our core group. But, of course, we have 8 year olds watching and loving our channel and sending us emails or writing us letters to tell us how much they want the channel. We also have 88 year olds telling us exactly the same thing. So, it’s actually less about age, and I think more about mental attitude. Particularly in Japan, the longevity of Japanese people is growing, and people are getting older and older. The average age of our audience is probably getting older along with the general population. They have a very good diet and access to excellent medicine. We are constantly identifying topics that will be of interest to that audience as well: the future of genetics, the future of health, or how to combat breast cancer. We would like to offer more programming in that area to inform and educate our audience. Oba: How is Discovery Channel as a brand perceived in the Japanese market? What kind of brand image is generally shared by the Japanese audience? Luff: We are actually constantly doing customer research, and last year, we did done quite lot focus groups for our viewers. Our brand is very well known, even amongst people who currently don’t subscribe to our channel. It’s generally perceived as a global brand, not a U.S. brand. This is a very good thing for us to hear because although Discovery Channel was started in the United States, it’s now global brand and we try not to be the U.S. focused. We try to be globally focused. I think having the globe in our logo helps us in that way. People generally remember the globe as a logo for us. They know the word Discovery and understand what it means in English. They have said that it’s very much of that exposing new information, being very balanced, and offering stories that the broadcast networks won’t offer. We have core viewers who are very loyal to us, and their feedback was generally very positive. “Please don’t change the way you operate.” “Please don’t change the programming that you are doing.” “Do more of the same level of quality and then remain a lot of our programs.” Generally, turning on Discovery

348 Channel is their first destination when they turn on their television. They want to see what’s on Discovery before they go anywhere else. Oba: Do you find any regulations on showing foreign programs in Japan like quota for the amount of foreign programs? How about censorship? Luff: In terms of the amount of foreign programming, we haven’t found any particular regulation. There is no requirement either minimum or maximum. That works to our audience as advantage. We are completely in the hands of our audience in terms of what they want to see. We are able to offer them a whole range of topics from different countries including Japan. So, it’s very much of free market in that sense. In terms of censorship, as a global brand, we are very conscious of not being culturally derogatory. We are very sensitive in terms of profanity, any words that are offensive. Obviously, we have to be very cautious and think balanced in reporting if it is a very serious documentary topic. We have to be careful about what images we show. For example, if there is violence, we have to be very conscious of what time of the day we need to show that. It’s less sort of regulation and more of just being very sensitive to the audience’s requirements. We are just very conscious of our audience and what their expectations are and listen very carefully to what they tell us. If they are offended by something, we know immediately. If they tell us that we haven’t gone far enough, they tell us. Our audience is very vocal and immediately sends us e-mails or telephone to our customer service centers. But, as legally, I’m not aware of any real regulations that sorts of protect us from showing any particular thing. We are more sensitive to our audience’s expectations. Oba: There should be mainly two sources of revenue for you. One is the license fee from platforms like cable system operator, and another way is of course advertising revenue. What is the ratio between them? Luff: The ratio varies from country to country. In Japan, specifically the ratio is still very in favor of the affiliate revenue. It’s mainly because of the distribution of the channel. As a general rule, the CS (communication satellite) industry in Japan is still in a very much of developing or growing phase. Terrestrial television viewing in Japan is still dominant. You have 80% of homes who have over-the-air broadcast but don’t have CS. Out of the 20% of homes that have CS, it’s up to each channel to maximize their distribution within that universe. So, at the moment, advertisers require a certain level of distribution before they can justify spending money. We are fortunate with Discovery channel that it’s now exceeded 5 million households in a total CS universe of 9 million. So, it’s got pretty good distribution, and advertisers have actually been attracted to it as a platform. In Japan particularly, we have another obstacle: there is no regular viewership rating for the CS industry, and advertisers usually require some sort of measure or effectiveness. Without that sort of accountability, it’s sometimes hard for an advertiser to justify allocating any of their budgets to the CS industry. So, at this point, we have still much more reliance on our license fees from our cable and satellite affiliates. But, advertising revenue is a growing percentage. I can’t give you exact numbers, but the predominant source of revenue for us is still our affiliate fees. Oba: Do you have multinational or global advertisers more or domestic ones?

349 Luff: As a global company, we operate on the three levels. Headquarters for international sales is based in New York. Each of the regional headquarters also has a division focusing on international deals. And then, for example, in Singapore, there’s the regional headquarters for any advertiser that wants to advertise within the Asia-Pacific region or outside the region. The example of the way that works is that we had a very good relationship with Tourism New Zealand for many years. We actually offer their campaigns to Discovery Channel viewers almost around the whole of our distribution around the world. You will see an ad on Discovery Japan promoting New Zealand for tour. That deal was come through the Singapore office, because New Zealand is part of the territory. The Singapore office then take that campaign to Europe or to the United States, and if you are a Japanese traveler and you go the United States, you will see that campaign on Discovery Channel in the United States as well. Tourism New Zealand identified Discovery Channel viewers as a great target for travel to New Zealand. There are the international deals and then regional deals. Companies like Honda, Sony, or Samsung out of Korea look to advertise on a regional basis, and sometimes that will include Japan as well. So, you will see ads on Discovery Channel for Samsung, which are targeting the Japanese audience. Similar campaign is running across the rest of region. So, when you are watching Discovery Channel in Japan and seeing the ad, it could have come from the New York office, from the London office, from the Singapore office or from our Tokyo office, depending on where the deal was done, where the client is based, and which territory they want to cover. Oba: What are your rivals or competitors in the Japanese market? Luff: Of course, our biggest competitor generally is the terrestrial networks, because they still have the biggest share of viewership. Within the CS industry, our closest competitors would be History Channel and National Geographic Channel. I think Discovery Channel still has significantly high distribution than National Geographic Channel, but we are constantly aware of them as a competitor on a global basis. They are constantly competitive and identify our successes and often copy things that have been very successful for us. And, if I were them, I would do the same thing. If you want to succeed, then copy the leader in the field. In Japan, Discovery Channel is still the leading provider of factual documentary entertainment, but we are constantly watching what National Geographic is doing. Oba: How important is the Japanese market for Discovery Channel? Luff: The Japanese market is a very large one. There has a very high population, very high income levels, and very high level of education, so as a market, it is a very important one for our business globally. Within the region, it’s one of most important and largest markets. In terms of opportunity, it also has huge potential, because currently the CS industry is only at about 19%-20% penetration. The economy is really improving as coming out of the recession period post the 90s. We have the support of both of our shareholders, Discovery International as well as our local partner, to expand our business, so we are very focused on opportunities in this market. It’s also a high technology market. New products are released all the time. So, it’s kind of leading the way even ahead of the United States in many respects in terms of the products that can be offered and what the consumer demand is. The use

350 of the mobile phone here is probably higher than in many markets in the world. Already with the development of mobile television technology and video-on-demand content being set to mobile phones, there is a huge opportunity for our brand in that area as well. Oba: What is the advantage for Discovery Japan to be part of a transnational television network as Discovery Channel? Luff: The advantage is that you have huge resources available all around the world. Even though I work for Discovery Japan, I’m still very much part of Discovery’s international business. I am in constant contacting with people in the Singapore office, in the Australian office, but then also it might be the European office. I’m talking to people in London constantly and talking to people in the United States. So, in terms of all aspects of our business, there are many resources available. We can share research globally. We can share programming on the global basis. We can identify opportunities for our audience that can be shared with other people in other markets. As a sort of a global network, we are constantly sharing information, material, and creative ideas. We are also operating on a digital basis. The Singapore operation center is a 100% digital now. So, whether it’s programming or short film program production, content can be shared across the whole world. It can be loaded onto a digital media center web site and instantly viewed by people in my office or shared with people in the London office. So, we can share material that can reduce the cost and also increase the level of creativity. Because we are sharing ideas constantly, my head of creative services, who is in charge of all of our promotions, can see what the London office has done, what the Singapore office has done, and even what the U.S. office has done. We get ideas from them or even give them ideas of things that we have just done and are working very well in our market. It’s constantly evolving a brand on a global level. Oba: To what extent is Discovery Channel Japan given autonomy in terms of programming decision from Discovery Network International or Discovery Asia? Luff: At the moment, it’s very much of collaboration rather than sort of having autonomy. We work really closely with the Singapore office on our all decisions regarding programming. So, the level of autonomy in some respect is low. We don’t have the ability to just go often do whatever we want. There are several reasons for that. One is really to ensure consistency of the brand. We are not doing anything that would hurt the brand or would be substantially different from the way that the brand is presented in other regions of the world. The second reason is really just a financial one. It’s much more cost effective to share material across the region than to something solely for Japan. Having said that, in terms of programming decisions, my team is involved in all of those decisions. They are constantly giving feedback to the Singapore office about what works here, what doesn’t work here, and suggestions about the schedule. The Singapore team is very receptive to those ideas. It’s a very much of collaborative process. Outside programming, we do a lot of production here in Japan like a short film between the programs. Most of that is done solely for the Japanese audience. And, in fact, we do a lot of brand work that’s just made for Japan, solely produced in Japan either by my marketing team or by my creative services

351 team. Now I see, as we do more and more work with advertising companies and the advertising clients in Japan, we are actually producing a lot more material, which usually takes short form at this stage. It ranges from a 15 second to a 3 or 4 minutes. But, it will solely be produced for Japan. So, we have quite a lot of autonomy in that sort of short film areas. In fact, we usually go ahead and produce those things and then share them with the Singapore team or with other regional offices afterwards. Although ideas are shared before the production is done, we are doing something consistent with which the wider brand is presented in our regions. It’s a highly collaborative process and, because of the way, we work as a global company. Oba: At the end of today, what do you think is the most significant factor to determine your programming schedules? Luff: What the audience expects and feedback from the audience. We do get occasional viewership ratings information. It’s only twice a year for the whole industry, but we take out that information into account as well. We are constantly looking for major stories that are relevant to our brand and our audience. So, it’s all about the audience really. I mean audience and the brand, and what we can offer them and what they are asking for. Oba: Do you mean the expectation of audience is much more important than how much a program costs? Luff: Obviously, we have budgets that we need to work to. But, the audience pretty much dictates how you spend your money as well. The fact that our audience really expects a high level of quality and a high level of depth of information means that we do have to spend more money on our productions. If the audience would say to us, “We don’t mind you can give us really low level of information and we don’t mind bad quality,” we would really change the way we operated. But, our audience is not telling us that. They are telling us high quality and depth of information that don’t come cheaply. So, we are constantly looking for ways of delivering that production cost efficiently. That’s a big challenge but the advantage of being a global company. We can share production cost and commission cost and find co-production partners all around the region.

352 APPENDIX P INTERVIEW WITH DISCOVERY CHANNEL ASIA

August 29, 2006

Oba: How many programming feeds to specific countries or markets do you have in Asia? Gibbons: We have 17 feeds across the Asia Pacific region. These 17 feeds are divided between our channel brands as well as geographically. So, for Discovery Channel, we have 6 feeds. We have a Southeast Asia feed. We have Taiwan, Japan, China, Australia and New Zealand that’s five, and then there is also India. We don’t manage India from this office but operate it from this office. And, those feeds are customized into different languages into complex and simplified Mandarin, Thai, Malay, as well as Japanese and Hindi in India. So, each of our brands is divided into geographical feeds, which are then language customized. Key markets in terms of the significant volume of business for us are Japan, Taiwan, and Australia. Oba: Do you provide the totally same programming simultaneously for those markets? Gibbons: We’ve got to stop by saying that there is a common buying strategy across all of our feeds according to the brand. So, Discovery Channel will have a programming philosophy and strategy, which means that whether you are in Taiwan, Japan, or Australia, we will go through the same kind of thought process in selecting programming. Now, we always try and maximize programming that is shared across the feeds. The reason for this is because we believe that to a very large extent, the appeal of Discovery is universal. If you like space programming and you are Japanese, and then if you are Taiwanese, there is no reason why you shouldn’t also like space programming. Why buy two different shows when we can buy the same show? So, there is a certain logic to maximize shared programming across those feeds. However, what we have also realized is that in order to connect with our viewers and to continue to grow our viewership, we need to be very locally relevant at the same time. This means offering content to people that is very close to their own personal experience. And, this means that we supplement our universal programming with very targeted local programming. So, for example, just on Sunday in Taiwan, we add a program called “Man Made Marvels: Hsuehshan Tunnel” as part of our “Man Made Marvels” series. Hsuehshan Tunnel is a new road tunnel that they have built that connects Taipei to the coastal tunnel of Yilan. Oba: I saw that program last night. Gibbons: Oh, you saw? Yes, that’s the one. That actually received extremely high ratings in Taiwan, probably the highest rates of program we ever had in Taiwan in 12 years of being there. So, when something is very relevant to people, that can deliver a very strong rating performance. What we are trying to do is to supplement our universally shared programming with content that is targeted very specifically at the needs of that market. When you look across each feed, there is shared programming, but there is also programming that is dedicated and specific to that feed. Oba: Approximately what percent of programming is shared across regions?

353 Gibbons: This is very rough, but I would say probably 60% to 70% is shared across most regions. Oba: What percent is shared between Discovery Channel Asia and Discovery Channel U.S.? Gibbons: The company is headquartered in the U.S., but each geographical region has a certain management, which means that each region really makes their own decisions about what programming they buy. So, in terms of what they share with the U.S., each region is different. For Asia, I think it’s commonly known that about 60% of our content is shared with the U.S. Oba: What should I call your programming feed catered to the Singapore market? Gibbons: Singapore does not have a dedicated feed. Singapore is part of the Southeast Asia feed. Southeast Asia feed covers all of the Southeast Asian countries: Singapore, Malaysia, Indonesia, Thailand, and the area up to Hong Kong. Oba: You also provide some language customization for each market. Gibbons: Yes. Let me explain about language customization and about the breaks. Just because we have a single feed for Southeast Asia region doesn’t mean that we can’t provide a dedicated service for each country, and what we can do is that we can send a number of audio tracks and subtitle tracks along with our video signal. So, basically depending which country you are in, you can take the correct audio track. We can have the shared video feed that people can take their own audio that is referring to their markets. And also, in terms of the breaks, we have the same… Oba: Do you mean commercial breaks? Gibbons: Yes, I can tell you about commercial breaks. We have the same promos and ad works that run around the region, but each local affiliate operator is able to insert their own promos at a pre-arranged point. So, in that case, we can have local people see local ads and also sometimes local promos within the affiliate time. That’s how we make sure that the shared feed, the Southeast Asia feed, is still targeted at the specific markets within it. Oba: Localization is a kind of buzz word in these days for global TV networks including you. What’s your definition of the localization of programming? Gibbons: I suppose that broadly speaking, localization means speaking to people in their own languages with content that is relevant to their cultural society. But, it can take many forms. You can look at language customization. So, as language customization policies as they relate to localization, you can look at the grid (the schedule). So, you might have the same programs, as Taiwan could have the same programs as Singapore, but maybe we just need to schedule them differently. You put this show at 10 o’clock and this show at 8 o’clock, so the grid is… Oba: Is it because of time difference? Gibbons: Time difference is obvious one, but also maybe the environment in Taiwan is different from Singapore. I’m just giving you an example, and this is not necessarily the fact. But let’s say in Singapore, the peak viewing time is 8 o’clock, and then, of course, you put your good series at 8 o’clock. But, maybe Taiwan is later. Maybe it’s 10 o’clock, so you put your good series at 10 o’clock. So, there might be environmental reasons why you want to change your schedule for each market. So, language customization, a dedicated schedule and line up, and dedicated promotables... the concept of promotables is important. A promotable is basically a show that we choose to

354 market very heavily. Now, it may be the certain things resonate more in Taiwan than in Singapore. For example, in Taiwan, they like mix, the wildlife programming featuring snakes, so we might do snake weekend in Taiwan, but we don’t do snake weekend in Singapore, because it’s not so popular. So, in terms of promotions, we will also localize. And then, finally in terms of actual content itself, localization of content means that you source or create content that is immediately relevant to their marketplaces. So, for example, the Taiwan tunnel program or “The History of Singapore” we added in Singapore became the highest rated program in the history of Discovery in Singapore. So, to create a regional content or source regional content for a specific market is sort of ultimate form of localization, because it’s also the most expensive thing to do. And then, another area is customizing the on-air promotions, which basically we use to promote our own programs. That also is fully language customized, not just the audio but also the graphics so that the local language is used on all of the forms for the on-air promotions. So, localization covers a very wide range of activities, but all of them are aimed at speaking to people in their own language with content that is relevant to them. Oba: Generally, what are your criteria when you choose content or produce content for Discovery Channel Asia? Gibbons: There are a few considerations. First of all, that’s looking at the brand itself. Whatever we produce, whatever we source, or whatever we buy needs to deliver the brand promise. The brand promise means what you expect from Discovery Channel. What is that viewers expect from Animal Planet? What is that viewers expect from Discovery Travel & Living? So, we obviously understand our own brands. We have done research to help us identify what people expect from that. For example, we know on Discovery Channel that quality is extremely important. We know that people look for Discovery to help them understand the world around them, making an insight into every area of human activities. One, at the same time, is accessible, engaging, and entertaining with our content. So, these are filters that we use to make our decisions about what we source and what we buy. There is more complex terminology that we also use. But broadly speaking, we look at what the viewers expect from our brands. And, we make sure that we deliver very consistently, like any brand even in other industries. The ability to deliver what customer expects from your brand is vital to the future and the growth of your products. Oba: How is Discovery Channel brand perceived in Asia in general and specifically by Singapore viewers. Gibbons: Again, we have a lot of research, so I can’t sort of give you all the details, because it would take too long. But, it is very clear what people are looking for from Discovery. They are looking for information about the world around them. They are looking for an insight into events in the world around them, something like behind the headlines. People can see what is happening around them when they watch news channels, but they want to understand what are the reasons for these things. They want to understand more in-depth what is going on. People also are fascinated with certain topics. So, we know that science and technology is very appealing. We know that people still love wildlife programming. We know that people are interested in culture and

355 history. And, we know people are interested in space exploration. So, there are certain categories of content that we know people are interested in. People want our programming. People are more interested in, for example, a forensic approach of story telling, meaning that they like programs, which identify a problem or a mystery that has to be solved, and then to go through the process of trying to solve that mystery almost like a detective story. So, this is a very popular format of programming that we discover people like from doing our research. People expect Discovery to always offer quality. In our production values and the way we do our programs, we must always deliver that level of quality. And, people like things that are topical and relevant and things, which actually are top of mind. If they are current events or in the news, or if terrorism or something like that is in the news, they want discovery to help them understand more about why it’s like that, who is involved, what is the history and the background, and that kind of thing. So, we just show the things that we discover from the regular research that we do for Discovery Channel. Oba: Do you think Asian viewers in general receive foreign produced documentary well? Gibbons: Sure. There is definitely a market for international documentaries. We know that because of the success of our ratings and the success of Discovery Channel in brand studies, according to the PAX survey, Pan Asian Cross Media Survey. It’s a viewership survey. Discovery has been the number one in that survey for eight years. So, we know that there is a strong demand for international documentaries. Pay TV reaches a smaller number of people than the terrestrial TV. So, we are not saying that everyone is going to love watching international documentaries, but there is clearly a significant number of viewers who are interested in having a window to the world, in being able to see what is going on beyond their country across all kinds of topics ranging from science through to the exploration. So, there is a market. Having said that, I think that we have also discovered that if we can find ways to be more locally relevant, we give them the same kind of quality and the same kind of insight. Oba: Do you think it’s possible to develop documentary films, which appeal to all over the world? Gibbons: Let me give you a good example. A number of years ago, we did a project, a co-production with BBC, called “Walking with Dinosaurs.” Walking with Dinosaurs was a breakthrough program, because it used animation technology that had not previously been used in documentaries. And, it created a world of Dinosaurs that was more realistic than anything that had ever been seen on television previously. This was a worldwide smash hit and broke ratings records everywhere, every country. Since then, we had other examples. Some are more successful than others, but I think every year there are a number of titles that cut through around the world. They tend to be on universal topics: Dinosaurs evolution, space exploration, ecological issues, world history like specially Egypt, and ancient civilizations. Those certain topics do have a global resonance, but not every show. Oba: You have a program titled the History of Singapore. Do you think it’s locally relevant content or content for viewers other than Singaporeans.

356 Gibbons: It’s a very good question. I think the point to make is that things are on black and white. So, something, which is locally relevant, can also have appeal around the world. The History of Singapore is a good example. I mean the History of Singapore is something, which, of course, is very relevant to Singapore. But also, the History of Singapore is something, which is interesting for many viewers around the world, and one of the reasons is because Singapore is actually a country that could easily never have existed. So, the question is how Singapore survives from essentially being separated from Malaysia with nothing, no natural resources and no wealth, to becoming such a fast developing nation. So, that story is interesting for the rest of the world, but when you look at the ratings, the ratings are highest in Singapore. And then, as you move further away from Singapore, the ratings probably get less and less, because even though it’s a topic that’s interesting for many people around the world, it’s the most interesting in its home market of Singapore. Oba: I’m not sure if I am going to watch when you provide some programs like the History or Japan. Gibbons: I mean it depends what people’s views are. Some people may prefer to watch domestic TV channels for local content, and, in some ways, when an international channel is doing a local story, perhaps some local people are not so interested in the international perspective on their stories. But, I think what we discovered is that there are some people who maybe not interested, but there is a larger number of people who want to see their own local stories featured on the international station. And, we have found that whenever we do a program that features a most specific country, almost all ratings for that program are higher than for the average programming. Oba: President Luff of Discovery Japan said to me that one of most important things for Discovery Channel is to show viewers stories generally unknown. Do you think viewers in Asia have curiosity to what they don’t know as well as Japanese viewers? Is there any difference among country markets? Gibbons: Yes, it is same. I can’t give you a scientific answer, but just for my own observation, I think that Asian viewers on a whole are extremely curious, and that’s why the Discovery brand is been so successful, because people really appreciate a television service that addresses that in a curiosity. In terms of who is more curious than others, I think it is very difficult to compare between countries, but there may be certain cultural, social, and political reasons why some countries perhaps have more of an interest in the outside world than others. Singapore is so dependent on international trade and business that it’s a very cosmopolitan place. There is a huge curiosity about the outside world. There is a huge interest in traveling in Singaporeans because of its relatively small size. A lot of people travel as well. When you get one bigger country like Japan, of course, I think the domestic issues probably are occupying more people’s time, and maybe not so many people have traveled. I am not sure what the numbers are. But, having said that, the Discovery Channel wouldn’t have been successful in Japan if people were not curious about the world around them. So, I think you find there may be differences, but I think you find the curiosity everywhere.

357 Oba: Do you think documentary films are able to go across national boundaries more easily compared to other types of programming like music programming or sports programming? Gibbons: It’s interesting. Probably, if you think about music programming, music programming has been quite successfully exported. And, that’s because people around the world like to consume each of those music culture. And, the countries like the U.S. and the U.K. and other countries like Japan and Korea as well export their music culture. There are people all around the world who would like to consume this music culture. So, I think music seems to me to be quite international. Sports is very international. People will watch the football from the Olympics, golf, or whatever all around the world. Entertainment TV is all the different because of language in some cases. But, even that, the U.S. is a huge exporter of entertainment content. I think that in many ways, documentary industry is smaller than these other industries to some extent. But, I think that what is different about documentaries is that with entertainment and music, there isn’t really an international part. People consume products of other cultures, so you have American comedy series, you have Korean drama, and you have Japanese Anime. But, with documentaries, it’s less culture specific. You can actually have an international documentary, and people don’t know where it’s been made. They don’t know if it’s made in the U.S., Singapore, or Japan. It is a culturally neutral, and I think that is what is unique about documentaries. It is possible to have something, which is more culturally neutral. Oba: I know some documentary films are less culturally bound compared to other types of programming. But, sometimes I think, for example, documentary films made in the United States may reflect the U.S. point of view, and some people in some countries may not like that. Gibbons: I agree. I think that’s certainly true to some extent, but not with every program. When you just go back to our example Walking with Dinosaurs program, I don’t think there are any cultural values in that show that people would have objected. But, there are other programs. I can’t give a specific type of, but let’s say someone wants to make a program about terrorism or about religion. Programs are like inevitably the values of the culture. People from other cultures who do not see that topic in a same way may not respond to that well. So, in those cases, we make the documentary program that we choose not to show in Asia, because we don’t think it’s going to be well received. We just have to be careful how we make that selection. Oba: I heard from President Luff that Discovery Networks International makes affiliates like Discovery Channel Asia or Discovery Channel Japan put a sufficient amount of investment called commission. Gibbons: A commission is a fully funded program. Oba: What’s the reason for this? Gibbons: We commission for the fund of our own programs, because we need a certain number of program hours for our schedules every year. We need thousands of hours to supply our networks. We can buy some of these programs from marketplace. We can jointly produce some of them with other production companies. Oba: Do you mean independent documentary productions?

358 Gibbons: That’s right. But, for some, we have to fully finance them and pay for them ourselves, because there is no one else is interested in co-financing that program, or sometimes maybe it’s an idea that we want to own all of the rights. If we want to own all of the rights, then we need to fully finance the program, because if someone else comes into and helps with financing the program, they will share the rights. This is particularly important in the world of the media, because as we seek to explore ourselves across multiple platforms, it’s important for us to own all of the rights. And, for us to do that, we have to fully finance, i.e., commission of programs. Oba: Do you think that’s more cost efficient way to produce programming? Gibbons: It is a very difficult question. I will put it this way. If you co-produce a program, and you have other partners, that is cheaper for you, because someone else just paid a half of it or a third of it. Then, you would think why we don’t co-produce everything. The reason is because it’s all about your ability to monetize the rights. So, if you can monetize all of the rights associated with the program, then you might as well commission it, because you make one of payment to make the product, and after that, you collect your pay TV revenue, your mobile revenue, your online revenue, your DVD revenue, and your broadband revenue. And, if you can do that, then it’s more cost efficient to make your own program rather than sharing the license with someone else, because if you share the license with someone else, and suddenly you want to roll out a mobile TV service, you find they move on the mobile TV rights. Then, you got a problem. So, it depends on your ability to monetize the rights. Oba: Discovery Channel Japan says that you keep up certain amount of common format that would work for the whole Asian region as part of Discovery Network. Gibbons: Right. Oba: Do you agree that affiliates of a global network should offer the same programming to some extent? Gibbons: Yes, I think there is no question that in order to protect and to grow the strength of our brand around the world, we need to offer a consistent experience to our viewers. Now because people tends to be interested in similar things that I said before, there are certain topics that resonate around the world, whether it’s space exploration, Dinosaurs, or topical of events. So, it should be possible to reach Discovery’s co-viewers around the world in certain cases with the same program. And, by making the same program, you create economies of scale and allow the company to invest more money in creating a high quality product. Whereas, if you made 10 different programs for 10 different markets, it would be too expensive, and it won’t be efficient to do that. So, there is a question of what is the most efficient way to deliver consistent viewing experience to our audiences, and the answer to that often is to have a shared program or even a shared format that can appeal to all these people. Oba: It is because you need huge production budgets. Gibbons: Exactly. The production budget can be 200, 000, 300,000, 500,000 or more than a million dollar. If you cannot come out to show this program between the different markets, your whole business model doesn’t function. Oba: So, making a good documentary needs a lot of cost.

359 Gibbons: It is a lot of cost. Oba: As an Asian headquarters, I think you are supposed to play a role as a kind of intermediate between Discovery Communications and each of local Asian offices. What’s your response when there is some disagreement between Discovery Communications and local offices like Discovery Japan or Taiwan? Gibbons: Ultimately, I think every organization will deal with this differently. For us, it’s true that we have a global organization DCI (Discovery Communication Inc), and an Asia Pacific organization, Discovery Networks Asia. Then, we have, for example, Discovery Channel Japan in Tokyo. These are separate business entities, so I guess all I can say really is that there are internal procedures and rules of engagement between each of those entities that enable us to resolve any differences that come up. And, I guess only thing I would say is that on the whole, organization believes in, on the one hand, managing a global brand and, on the other hand, being very responsive to the needs of our local markets. So, we have procedure in some place enables us to balance that, and each time a disagreement comes up, we are able to discuss it between those parties and always to find a solution. Oba: Is it difficult to take balance between global perspective and local perspective? Gibbons: Yes, sometimes it’s an issue, but we are not inflexible. So, there is no one forcing us to add programs around the world. We make decisions in consultation with the local markets as to what is programming that is going to resonate the most in that marketplace. And then, we are free to make those decisions. So, that kind of conflict doesn’t really ever arise. Oba: So, you are giving much autonomy or freedom when your local affiliates like Discovery Channel Japan chooses content. Gibbons: Yes, basically we are sensitive to the needs of our local markets. So, there is no question of imposing programs on markets which are not appropriate, and that wouldn’t happen. Oba: So, if you prioritize local perspective, what are the advantages to be part of a global network like Discovery Channel? Each affiliate might be able to independent in terms of programming. Gibbons: I think, in each local market, there is recognition amongst the management and the ownership of those organizations that Discovery is a global brand, and that there is going to be a large element of the channel that will be shared with other regions, because otherwise it just wouldn’t make any sense. The reason why we running Discovery is because the Discovery brand has been built up on a global basis, and people expect certain things from it. The only way to deliver consistently those experiences to people is to take advantage of Discovery’s ability to produce those programs. So, I think it will be very difficult for any country to run a Discovery Channel without taking programs from Discovery’s global production machine. It would not be feasible. Oba: Do you mean that level of production quality for Discovery Channel is very high compared to other networks? Gibbons: I always say that our quality standards are extremely high, and we invest what we need to maintain those standards. The fundamental issue is that if we don’t share programming, that business model doesn’t really work. The business model for almost many international TV brands is based on a

360 certain element of a shared content. Otherwise, economically the business model doesn’t work. Oba: But, for MTV, there is localization in each affiliate by producing its own programming. Only handful percent of their programming is shared all over the world. Gibbons: I can’t comment on MTV, but I think even MTV has some shared content. But, the balance depends on how cost effectively you can localize. So, I would say that it’s different to do a studio show in a local language and to create a high quality documentary. Oba: How important the Asian market generally is and the Singapore market specifically is for Discovery Channel? Gibbons: I can’t really say much about how important we are globally, but certainly I think the Asian Pacific market is extremely important to the company, because it’s a growing market and because the economic growth rates here are higher than many other parts of the world. And, I think people see the potential not only of developed markets like Japan but also markets, which are not yet at that full stage development, like China. So, you have a region that has Japan, China, and India. I think people think it is important. Oba: Again, it seems to me that localization and sharing programming resource among local affiliates within a global network are somewhat inconsistent to each other. What’s your idea regarding this point? Gibbons: Why do you think it’s inconsistent? Oba: To localize your programming, you may have to produce programming for each market, which doesn’t mean sharing content. Gibbons: What you are saying is that localizing undermines the economies of scale. Oba: It could be. Gibbons: You are correct when you are analyzing the business model. You are always looking at the opportunity cost of localizing. On one hand, you have a program that can air in 100 countries, and then you have a program that airs in one country. And, they cost the same. This program [the former] is better than this program [the latter]. But, the thing is not as simple as that, because the thing is that this program maybe air in 100 countries, and it cost a $100 to make. Maybe, this programming only air in one country, but maybe that only costs $10 to make, and often it is cheaper to produce. For example, in Taiwan, our production costs are much lower than they are in the U.S. We can produce more cheaply for that one market, so that’s one thing that can help us actually offset that equation. The other thing is what if this program can air in 100 countries, a universal program, and this is a local program, talking about the Taiwan market. I add the universal program, and it gets me one rating. I have a local program that gets me two ratings points. This is better for my business two ratings points. So, if the price of this program is half of the cost of making this program, can you see the economics can actually work? It depends on cost. It depends on audios delivery. We make those decisions, I mean, make those trade-offs. And, in certain cases, it’s profitable to do local programming. In certain cases, it is not. Oba: Which one in general advertisers prefer? Gibbons: I don’t think you can say that the advertisers prefer either universal or local programming. They want brand defining Discovery content that generates big audiences, but that could be Walking with Dinosaurs, or that could be

361 Hsuehshan Tunnel. Both of them have pulled in a lot of advertising. I guess fundamentally the last thing I want to say is that the viewer doesn’t look at the channel and think, “Okay, this is my global program, and this is my local program.” They look at it and they think, “Does this help me understand my world?” So, what is in my world is my awareness of the countries, my interest in space exploration, or my interest in wildlife. But, my world is also my understanding of my own history of famous people from my own country. So, people don’t see global or local, but they just see, “Does it matter to me?” I guess all we are trying to do is to make sure that we make content that matters to people, according to which country they live in. That involves a different balance between, in our terms, universally sourced product and locally sourced product.

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388 BIOGRAPHICAL SKETCH

Goro Oba became a faculty member in the Department of Cultures and

Communications at Kyoto Gakuen University, Japan, in 2006. He currently teaches “Mass

Media Theory” and “Media Industries,” along with four seminars, and also is expected to offer “Content Business” from 2008.

In 1991, Goro Oba received his bachelor’s degree at Keio University, Tokyo, as a sociology major. Then, he worked for the Programming and Production Division at Nippon

Television Network until 2001 when he left his job to study at the graduate level in the

United States. After receiving his master’s degree in telecommunications from Michigan

State University in 2003, he chose University of Florida as the place to pursue his research interests and to earn his doctoral degree. In 2006, he became a doctoral candidate in mass communication.

Goro Oba’s fields of research interest include issues in strategic management, marketing, and branding by media firms, competition in media markets, structure of media industries, and media globalization. He has published articles in such academic journals as

“Journal of Media Economics,” “Journal of Media Business Studies,” “Gazette: The

International Journal for Communication Studies,” “Media Asia,” and “Keio

Communication Review.” He has also presented his research at major conferences, including Association for Education in Journalism and Mass Communication (AEJMC),

International Communication Association (ICA), Broadcast Education Association (BEA), along with national conferences in Japan. He was given best paper awards from some of these conferences.

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